Khosla Ventures Tue, 28 Apr 2015 00:54:57 +0000 en-US hourly 1 Introducing the Khosla Ventures Design Internship Program Fri, 27 Feb 2015 22:06:06 +0000 Design is a profession where people learn by doing. The best designers are making all the time. They have personal side projects; they’re constantly inventing and reinventing. They cultivate a practice of self-reflection and iterate tirelessly. As an outcome of this practice, they become good designers because they’ve taught themselves how to be good. At Khosla Ventures, we believe the best way to gain employable skills is to learn by doing, which is why I’m pleased to announce the launch of our Design Internship Program

We’ve cultivated internship opportunities with some of the most interesting startups in our portfolio and are working with the top U.S. design schools to invite students to apply. For students who want to pursue a career making technology, services and products of the future, there is no better way to learn than by doing.

In contrast to school projects, real world settings introduce a whole range of challenges that make design hard that many people don’t fully understand. What often gets in the way of delivering great design is not lack of skills or knowledge, but the context in which the work is being done. Maybe there is too much design by committee and there is no clear decision-making process or owner. Or maybe the designer isn’t empowered to make design decisions stick; after all, when design decisions are a matter of creative judgment, whose opinion is the one that matters? Maybe there isn’t a robust collaboration between design and engineering that leads to useful, innovative technological solutions directed towards fulfilling people’s needs. Even organizational politics or inertia just makes change hard.

That’s why so much of what it takes to be a good designer derives not just from hard skills and knowledge but soft skills that are rarely taught: empathy, taste and working with other people. In the design profession, the soft skills matter at least as much as the hard skills. Soft skills are what designers invoke to work effectively with collaborators and stakeholders, to empathize with the people they’re designing for and to bring inspiration and delight to these people through the experiences designers create.

Some designers struggle to land jobs because they haven’t gained enough real-world experience collaborating with cross-functional teams to build something greater than an individual working alone could ever do. This is why we believe coursework would be interwoven with internships so that knowledge gained in an academic setting could be applied and one’s experiences in the workplace would then inform future studies.

While many startups would love to hire interns, it can be really hard to connect with students. Early stage companies often don’t have the brand recognition or resources to reach out to top schools to attract students for internships. Yet, they are often great environments for students to gain real world experience.

Khosla Ventures aims to help solve this problem by connecting startups with design students. In doing this we hope to create a win-win situation by advancing design education while assisting our companies. We are now accepting applications for summer 2015, for any student interested in user research, visual design, interaction design and front-end development. Applicants are considered on a rolling basis, so apply now to be considered for these opportunities.

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Startup Grind / Fearing failure as an entrepreneur Mon, 23 Feb 2015 19:17:38 +0000 Fireside chat with Startup Grind founder, Derek Peterson, and Vinod Khosla on fearing failure as an entrepreneur and other lessons learned. 

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Gene pool engineering for entrepreneurs: Conclusion (11/11) Fri, 06 Feb 2015 05:32:09 +0000 In essence, management for environments with rapid change or where new rules are being added to the competitive landscape are very different from management for relatively stable environments where the rules of engagement stay relatively consistent over time and old institutional learning, applied with discipline and process is the right approach. And each type of environment requires its own unique approach beyond building the precisely engineered teams. When venture capitalists perform portfolio assessments, a strong correlation emerges between the strength of the team and confidence in the likelihood of a positive outcome. But beyond strength of the team attention is seldom paid to the engineering of the team to the specific risks and opportunities that a stratup has.

management for environments with rapid change or where new rules are being added to the competitive landscape are very different from management for relatively stable environments where the rules of engagement stay relatively consistent over time and old institutional learning, applied with discipline and process is the right approach.

The goal here is to make the platitude of “hire great people” a more actionable and quantifiable process. Great ideas suffering from poor execution can kill companies, while less spectacular ideas coupled with phenomenal teams can quickly swing a company from troubled to a success. But beyond this correlation, our experience says engineering the gene pool to the task at hand may be just as important if not more so than pure excellence. Consequently, managers should focus on building an organization by collecting a diversity of talent vs. simply hiring to a functional plan or budget. While there are multiple mainstream approaches to building great teams through functional recruiting, the gene pool engineering construct can create the entrepreneurial, problem-solving and rapidly evolving culture, goals and plans that have become the hallmark of many Silicon Valley success stories. Leaders and managers should act as shepherds rather than sergeants, and focus on applying this approach to mitigate risk and accelerate new opportunities for a rapidly growing business.

make the platitude of “hire great people” a more actionable and quantifiable process. Great ideas suffering from poor execution can kill companies, while less spectacular ideas coupled with phenomenal teams can quickly swing a company from troubled to a success.


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Gene pool engineering for entrepreneurs: Step #5: Pursuing and recruiting candidates within that “gene pool” for recruiting (10/11) Fri, 06 Feb 2015 05:28:35 +0000 While the final mix of employees in the gene pool will depend on exogenous factors such as relocation and compensation, a manager has the paintbrush to structure a team that mixes varying educational and functional backgrounds, domain expertise, age, and implementation skill.




By addressing a company’s largest risk factors with proven problem solvers and creating a team that welcomes the exchange of ideas and best practices and experience from different areas, a team lead is engineering an organization that has the highest probability of mitigating risk and taking advantage of upside opportunities in the face of change, innovation, risk and lack of clarity into the future. Often the best opportunity may not be the current plan, but an “adjacent possible” solution that offers more room for an innovative approach.[2] In addition the team will be best qualified to respond as the environment changes. In our ePowersoft example, the mix of high profile industry luminaries from market leading firms, junior engineers who represent the best research minds in academia, and experts from adjacent industries has significantly improved the probability of a successful technology innovation. 

Every startup must be actively seeking out opportunities, which means actively pursuing the hires that find and exploit those opportunities.

Other risks like marketing and product or segment selection remain and are the next phase of risks, opportunities and hiring. It is important to remember that risk-tuned hiring is not enough! Every startup must be actively seeking out opportunities, which means actively pursuing the hires that find and exploit those opportunities. Repeating the same process of gene pool engineering for the downsides (risks) and upsides (opportunities) of any given industry ensures that the startup is evolving its teams and products in both directions.

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Gene pool engineering for entrepreneurs: Step #4: List the top three or more experts at each center of excellence with relevant skill sets and recruit them (9/11) Fri, 06 Feb 2015 05:26:46 +0000 Recruiters will often place a cursory “feeler” out to one or two individuals within an organization before checking the box and moving on to another firm. This customary practice reveals two flaws that our gene pool engineering approach addresses. First, we recommend that senior team members who thoroughly understand the scope of the problem and not placement agents or junior team members drive the activity. Given that recruiting substantially informs a start-up company’s plan, senior leaders should view the process as an opportunity to learn and refine the business plan. Going deep into the risks and various candidates’ views of the risks (and identification of additional risks: “did you think about xxx? That might happen?”) can materially improve the understanding of your true risks and opportunities and tell you a lot about what the candidate might contribute to your team. Senior management should spend a lot of time on these tasks and take recruiting as an opportunity to get lots of outside views. Getting opinions, especially skeptical ones, are important and they should be considered even if they are eventually rejected. Second, hiring managers should expect to engage in multiple informational conversations with several candidates in the target Center of Excellence. This enables the company to triangulate on the A+ players[1] through multiple data-points and widens the network to unearth candidates that might not have been previously visible. Applying more rigor in this search and screening process has the added benefits of providing high quality, non-biased external references to final candidates in the pipeline and creating a broad database for future hires or backups. However, on the latter point, startup teams must remember that maintaining organizational diversity is critical to establishing a successful team. In fact, if a recruiting process does not improve understanding of the risks and opportunities in an area being recruited for, it is likely that the recruiting manager has not been looking broadly enough or with an open enough mind. I often say in this process persistence is key in the face of good candidates that are not looking when approached through this process. To me, when recruiting, a “no interest” is a “maybe” and a “maybe” is a yes!

Getting opinions, especially skeptical ones, are important and they should be considered even if they are eventually rejected.

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Gene pool engineering for entrepreneurs: Step #3: For each risk, locate the centers of excellence (8/11) Fri, 06 Feb 2015 05:24:39 +0000 The third step of gene pool engineering involves identifying the organizations across academia, the corporate world, and any other top institutions that make use of the relevant skill sets for a particular risk. The best skill set does not have to be readily obvious in that center’s field, though. If an electronics startup is looking for a materials scientist, a center of excellence might be a world-renown company that supplies the automotive industry with casings. This could be the case because maybe scientists in this company work with the widest range of materials necessary for our venture and because they pick up design and manufacturing skills from that particular corporate environment. This list should include the traditional targets of direct competitors, bleeding edge public and private R&D labs, and divisions within large multinational corporations. The team should also identify adjacent sectors that may have seemingly little overlap at the end-product level, but share similar discipline in the product development process. Find out who in each company worked on the project and made contributions or gained a lot of experience on what not to do or how to solve the problem. That means tracking down details of the relevant project or technology within each of these companies. What was done? By whom? Names below are disguised:



Headhunting to Key Risks

In our ePowersoft example, we have identified experts in the traditional recruiting targets including direct competitors like Cree and firms with application expertise like Raytheon. We also chose to approach experts in non-obvious, adjacent industries like solar. First Solar’s design rigor, focus on cost-effective manufacturing, and history of meeting deliverables are directly applicable to electronic devices. This led us to add several high priority candidates from First Solar to the gene pool. Ultimately, the resulting heterogeneity of thought from an engineering team with diverse backgrounds encourages the exchange of ideas and evolution of new cross-bred ideas. Mixing of genes is a powerful technique. The technique draws its power from the optimization of diversity, though, which is why the diversity we look for (age, industry experience, problem-solving portfolio, and creativity) are critical. It is not that we hire for any generic kind of diversity. Rather, we purposefully hire for specialized diversity.


Gene Pool Diversity


Look Outside the Company/Sector


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Gene pool engineering for entrepreneurs: Step #2: Define the skill-set necessary to address those risks (7/11) Fri, 06 Feb 2015 05:21:59 +0000 To address the key risks within the company, the main tool available to a CEO or manager is the hiring of experts who have successfully solved similar problems in the past. In the example above, the mission critical risk involves the engineering of electronic devices, specifically next generation diodes and transistors. By bringing on experts who have experience in designing, fabricating, and testing these devices, the organization increases the likelihood that a new device based on the company’s unique technology can successfully be implemented at scale.

The company should consider hiring multiple engineers with diverse backgrounds to address a key risk area, especially if it is critical to success. The principle guiding this step is the collection of conventional wisdom and experiences across multiple companies and letting them collide in healthy discussions. The more varied the company background of the engineers, the more failures and solutions at disruption they will have seen by the time they all sit around their lunch table in their startup environment. At the same time, each hire must add to this ‘specialized diversity,’ while also fulfilling the functional needs of the organization (it makes no sense to have a diverse team of all vice presidents, for example). In this case, because the other four technical risks are interwoven with R1 (device engineering), we chose to hire a Vice President of Engineering with expertise in that field to oversee the entire project and three additional device engineers with competencies in the major facets of device engineering. For example, an engineer might be a world leader in the computer simulation aspect of semiconductors but weaker in translating the simulations to actual fabrication techniques. Bringing on three experts in this category allows us to balance the total skill-set across the group. It also lets ideas collide from different backgrounds and hopefully get resolved as more compelling and more innovative solutions.

The more varied the company background of the engineers, the more failures and solutions at disruption they will have seen

For ePowersoft, we also consciously built diversity of thought in the devices team by mixing more experienced industry luminaries with younger engineers. While the more inexperienced team members lack the breadth of knowledge provided by the veterans, they can offer a corresponding lack of industry biases and a fresh perspective on a problem. “Been there” or “tried that” can save lots of effort by eliminating experiments that are already known to “not work,” but can also limit experimentation and a bias towards conventional wisdom. A mix of collecting all the mistakes and learnings that have already been made in other organizations (ideally a diverse set of organizations in diverse industries) can combine with the younger folks with bright ideas and lack of institutional bias. Hence, the existing belief systems can, in our view, create a powerful mix to solve new and unique problems. The combination helps ensure we explore the full solution space.

The more inexperienced team members lack the breadth of knowledge provided by the veterans, they can offer a corresponding lack of industry biases and a fresh perspective on a problem

In addition to mixing the age groups, we also sought to mix the backgrounds of the engineers while keeping their proficiencies and competencies complementary. Specifically, we looked for engineers in areas with solar cells, LEDs, transistors, and others. This is because engineers working with these devices employ similar physics and speak a common language. Yet, by being from different fields, they cover a wider set of industries and problems encountered in each. This intersection of multiplicity of application and similarity of language is one of the key goals of gene pool engineering.

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Gene pool engineering for entrepreneurs: Step #1: Identify the five largest risks (6/11) Fri, 06 Feb 2015 05:20:30 +0000 In “Risk Analysis for Entrepreneurs and Venture Capitalists,” the Khosla Venture team outlines a process for systematically identifying risky components and their multiple failure modes. Risks fall into the category of technical risk, where the failure of interdependent modules could result in the collapse of the product as a whole, or general business risk or marketing risk, which encompasses everything else that is required to take the product to market. For gene pool engineering, each of the five mission-critical risks should be outlined by the team lead. In the case of ePowersoft, semiconductor device engineering (R1), materials development and deposition (R2), scaling manufacturing processes to multiple tools (R3), device packaging (R4), and plant operations (R5) represent the largest risk items. ePowersoft is an early stage company so most of the risks were technical and operational. The products fit into existing markets, so marketing to current requirements was not a key risk early on. One can imagine at a later stage, once the technology breakthrough has been established, adding “marketing to new markets” or “creating new markets” for this “power electronics component” as a key opportunity (or a risk if existing markets for this component were not accessible for some reason). One would then gene pool engineer to such additional risks or opportunities. Though gene pool engineering for risks is essential, it pays to also engineer the gene pool for additional “upside opportunities” the company may have. Keep in mind that Twitter, Facebook and Google were not “existing markets” but were markets created by the startup. Sun, Cisco, AOL were not existing markets either. Finding the team that can create the option of adjacent or new markets or innovative product approaches ( software as a service instead of a product) to old markets or adjacent markets (AirBnB, a market adjacent to hotels) to current markets is often the unexpected but massive payoff of engineering the right team.


Key Risks Facing Our Company



Five technical risks = success or failure

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Gene pool engineering for entrepreneurs: Benefits of gene pool engineering (5/11) Fri, 06 Feb 2015 05:18:33 +0000 Benefits of Gene Pool Engineering

The goal of startups is to create products that disrupt an established industry with its own rules and product lines. The founders cannot do it alone, so they require a team to help them do both: build the product and disrupt the industry. Most urgently, though, the founders are looking to gain acceptance with their product in the shortest amount of time for the greatest amount of impact. To ensure both, the founders require diversity in their team. Not diversity in the generic sense, but diversity in specific dimensions: age, professional record, academic background, and mindset. By maximizing diversity along these lines and applying it specifically to address identified key risks to the next acceptable product iteration, the team leaders ensure alignment between their first hires and their startup’s first challenges. This risk-tuned diversity manifests in the product through the reduction of time, energy, and resources to achieve the first key iterations. What an un-engineered or imprecisely-engineered team might have to learn through product iterations (each of which could take months), a precisely-engineered team could learn through conversations (each of which could take a few minutes). The risk-tuned diversity manifests in the startup’s disruption potential by assembling – through the people’s previous industry experience – not only a comprehensive outline of the industry rules, but also a comprehensive understanding of their existence, requirements, and rigidity. In this way, the precisely-engineered team does not have to run up against them through inappropriate design or uncomfortable industry discussions. The team can instead steer the startup in the right direction from the get-go. The overarching goal and benefit of gene pool engineering is to mix the professional expertise and industry understanding of the experienced hires with the entrepreneurial energy and innovative ideas of the founders. The result is a startup culture that produces products with higher disruption potential faster while simultaneously opening the startup to opportunity-tuned side hiring.

Mix the professional expertise and industry understanding of the experienced hires with the entrepreneurial energy and innovative ideas of the founders.  Before explaining each step in detail using examples, it is important to understand what the benefits of gene pool engineering are in a more tangible sense. How does the kind of diversity we hire for play out in the innovation process? Let us model the innovation process in a startup with four simple steps: problem identification, solution brainstorming, solution prototyping, and solution testing. The value added – beyond hiring talent tuned to risks and opportunities – we look for from our engineered diversity comes from the diversity of the team (backgrounds), experience (problem-solving portfolios), and dynamics (personalities/mindsets). Diversity in terms of the backgrounds ensures that knowledge from different fields can come together in the process of solving similar technical problems. Here, it is important to find scientists and engineers not from the same field, but from different fields that utilize similar chemistry or physics or other knowledge bases. This background is not enough, though. Each addition to the team brings also a problem-solving portfolio not necessarily from the field they were trained in. The wider this range of solutions produced, the wider the range of problems encountered. The collective range of problems and solutions engaged by the entire team opens the door to finding potentially new problems and solutions the team has seen in different contexts outside of their current field. Communicating and wrestling with these issues requires myriad yet complementary personalities that can work together in such an environment. Beyond working together, varied ways of thinking trigger broader dialogue that usually inspires never-before-seen possibilities. This– “soup” is the best way to describe it – is the lifeblood of any successful startup.





It is important to clarify the difference between risks and components of any given technology venture. Building a computer system requires software and hardware, for example. Within hardware, there might be design, manufacturing, and materials components, but not necessarily risks. Proper risk identification is the key to this process, given the founding team, current technology, and best practices, certain things like design and manufacturing might not be risky at all. It could be, however, that the materials component (say heat management) that has never been applied before in this space might be extremely risky. Therefore, recruitment tuned to risk minimization leads to hiring specifically to counter risks in heat management versus “hiring to handle manufacturing” which is more traditional. It is important to understand how the hiring process should complement the role of the innovator. The innovator tends to be the naive risk-taker, who develops and pursues his idea for disruption. Some of the first hires should, therefore, bring in a comprehensive understanding of the to-be-disrupted industry, its requirements, and history of past failed disruption. This way, the innovator’s idea can be leveraged fully against the industry biases to maximize its disruption potential. In outlining the process below, we consider a venture that is risky in multiple components, so that the example is as comprehensive as possible.

The innovator tends to be the naive risk-taker, who develops and pursues his idea for disruption.

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Gene pool engineering for entrepreneurs: Engineering the gene pool (4/11) Fri, 06 Feb 2015 05:17:38 +0000 The goal of gene pool engineering is first to create a culture where multiple people engage in problem solving, and team members share best practices from previous organizations and a diverse set of backgrounds for the specific problems being addressed. More than this, the hires must not only add strengths, but also help minimize risks through their diverse previous experiences. It is easy to hire to boost a team’s strengths without addressing a team’s weaknesses. The key goal is to understand all the nuances of an industry and have a full map of all the issues before one starts to disrupt them: what has been done before, what has been tried before, did it work or fail and why. Having a gene pool engineered team for all this past history (both the key requirements and the opportunities as well as failed strategies to meet the requirements) allows one to mix all the industry knowledge with the new ideas the founders usually bring. The resulting diverse “soup of experiences” creates a larger pool of problem-solving ideas beyond better understanding of the industry one wants to disrupt and increases the likelihood that an organization will make superior decisions with respect to the specific innovation it wants to encourage and the risks it wants to manage without “group think or naïve think,” both important failure modes. Given, within start-up companies, big technology challenges require multiple iterations and a bit of luck, an agile and diverse organization is critical to problem-solving. The same concept holds for evolving business models that require constant adjustment and new ideas. In essence, we believe management of change, be it innovation, risk management or rapid business conditions change require a new style of recruiting that goes beyond the functional skills of the individual to consideration of team diversity, experience diversity and dynamics. Fundamentally we believe that a team can be “precisely engineered” through this “gene pool engineering” process to manage the risks AND to take advantage of opportunities to create disruption without running afoul of key requirements of the industry.

The goal of gene pool engineering is first to create a culture where multiple people engage in problem solving, and team members share best practices from previous organizations and a diverse set of backgrounds for the specific problems being addressed.

The process for gene pool engineering is as follows:


  1. Identify the five largest risks in a project, environment or innovation.
  2. Define the skill-set and experiences necessary to address those risks
  3. For each risk, locate the five Centers of Excellence both inside and outside the industry for that specific risk. A center of excellence could be a company but often one wants people who have solved similar problems in different industries. Which company has solved this kind of problem before independent of whether they are in your industry or not? Try and identify 3-5 companies that addressed each risk.
  4. List the top three or four experts at each Center of Excellence. Who worked on the problem in the companies you identified in #3? Try and find 3-5 names at each of 3-5 companies you have identified above. The list then results in a list of up to twenty interesting candidates qualified to address each risk but come from different companies and hopefully different industries.
  5. Contact candidates within that “gene pool” for recruiting and hire 2-3 people who have diverse backgrounds and are qualified to address each of the risks they are targeted at. In the end, you should have a diverse team TUNED or ENGINEERED to the specific risks your company faces. In addition, hopefully you have engineered in enough diversity to both understand all the solutions to that problem that have already been tried in and outside your industry. Here, it is important to not only get the right skills, but also to get them from different companies, industries, experiences, and ages – along our suggested dimensions of diversity.
  6. Repeat the process above for the five largest “opportunities” for upside in the project. Running a startup is not only about combating risks. This is why, either in parallel or after this risk-tuned hiring process, the team leaders should also engage in an opportunity-tuned one. The process remains exactly the same, but the target (opportunity instead of risk) changes. These opportunities could be emerging from inside or outside the team. Internally, the merging of experiences, solutions, and insights could trigger opportunity areas that become apparent only with new hires. Externally, the industry could provide certain vulnerabilities or states that the startup could take advantage of. What could very well happen is that the risk-tuned hiring process gives rise to a team that provides (through the knowledge of industry rules and experiences with products in that industry) opportunities that then become the focus of the next round of recruitment.
  7. Keep in mind that ideally, any hire should not only do their “functional job” but should bring enough experiences to know “the kinds of problems others have encountered with this technology” (and those that you might run into), the kinds of solutions that have been tried before and worked or did not work, and additionally, they learn to ask enough questions to make other people in the team better thinkers about their own areas of specialization. In this way, each hire stretches the functional expertise of a team (by adding a skill set that was not present before), but also stretches all of the team members outside of their present comfort zone. If hiring is timed right, this ensures that the ‘stretching’ happens just as the team was getting settled down, perhaps becoming too comfortable.


To illustrate the concept, we present the team structuring approach applied by ePowersoft – a Khosla Ventures portfolio company in the power semiconductor space.

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Gene pool engineering for entrepreneurs: Functional hiring (3/11) Fri, 06 Feb 2015 05:15:41 +0000 Functional hiring



Entities structured with the traditional hierarchy often hire reactively, such as when an opening occurs due to attrition or poor employee performance. Consequently, firms facing market environments where change, innovation and rapid evolution take place can rush into a process that ends with a candidate to “fill the job.” Not knowing any better, HR managers or recruiters often take a narrow view of the skill set required to best solve the problem. They pick from a pool of prospective employees who come from within the organization or have similar backgrounds to the senior manager. For example, managers of GE heritage gravitate toward GE-trained candidates because of organizational familiarity and preconceived notions about the quality and familiarity of the ex-employees. Insert nearly any company for GE and the same holds true. This focus on familiar pedigree – but even more importantly the functional requirements (for instance, the need for a manager with “materials science Ph.D. or substitute “consumer marketing” and 10 years of experience managing materials science projects, etc,) result in the employee search space lacking critical levels of diversity in both experience and thinking. The Center for Creative Leadership has shown that in nearly one in four recruiting cases within Fortune 500 companies, the candidate selected was the only candidate considered[3]. Unfortunately, recruiting from the same organization enhances groupthink, furthers bureaucracy and limits risk-taking. It also can create an environment where problems that could have been avoided were missed due to homogenous thinking and adoption of a rigid problem-solving methodology. GE’s fabled six sigma process “DMAIC” is a highly successful set of analytic tools but rarely encourages outside-of-the-box thinking.

Focus on familiar pedigree – but even more importantly the functional requirements…result in the employee search space lacking critical levels of diversity in both experience and thinking

Leaders can be successful in the rigid traditional hierarchy built with functional recruiting but much of the impetus then falls on the leader to ask probing questions and demonstrate flexibility in adopting the best possible solution to a problem. This leader must also encourage a culture of independent perspectives, no repercussions for promoting ideas and a willingness to iterate on solutions as a team. He or she must take great care in keeping the entrepreneurial spirit alive. Traditional recruiting and techniques can be used to encourage and manage innovation. Intuit founder and Chairman, Scott Cook, has described a recent directional change in middle managers as “guiding experimentation” rather than “managing projects”. 

[3] Fernández-Aráoz, Claudio, Boris Groysberg, and Nitin Nohria. “The Definitive Guide to Recruiting in Good Times and Bad.” Harvard Business Review May 2009. Web. <>.
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Gene pool engineering for entrepreneurs: Background on traditional (functional) recruiting (2/11) Fri, 06 Feb 2015 05:14:35 +0000 Background on traditional (functional) recruiting

The traditional organizational structure consists of groups headed by senior leadership. We are all familiar with the standard organizational chart comprised of separate teams for marketing, sales, engineering, human resources, etc. Alcatel-Lucent has 16 groups reporting directly to the CEO. Within each silo, a combination of merit, seniority and responsibility determines titles and roles. For example, the organizational structure of Lucent (or NBC or insert the name of your favorite typical large company) consists of product line engineers at 100 and 200 level designations reporting into the more experienced 300 level project managers and vice presidents who are the decision-makers. Within companies adopting this traditional hierarchy, senior managers can become mere tollgates in the decision-making process rather than participants in the problem solving exercise [1]Most of the time, startups need a culture of experimentation, and an attitude of “change the industry rules, not play by them” is a key requirement. Often in larger, more stable enterprises, repeating yesterday’s strategy is 90-percent of the job. In startups, there was no yesterday and one can’t use “industry rules” to cause disruption. Knowing how the industry works and having experiences from it – as long as that knowledge does not dominate decision-making – can reduce risks and also help identify new opportunities and industry vulnerabilities. Since generally a startup is trying to upend the industry rules of yesterday, one has to have enough talent to meet industry “requirements” and have knowledge of existing systems while changing the rules of engagement.

Startups need a culture of experimentation, and an attitude of “change the industry rules, not play by them”

 This nuanced approach to change, innovation and disruption is dependent upon the team one builds. One needs team members to lead and add to the thinking rather than follow a process. To think of and execute on experiments, to lead thinking instead of simply responding to competition and the next increment on a broad base are significant differences in the needs of startups versus bigger, more established entities. This “beyond the functional role” thinking can come from any level of an organization, and team leaders should be open-minded and encouraging of this “experimental” behavior. If a startup instead takes the big company approach, team members are prone to adopt “more of the usual” mentalities and act as individuals who simply feed information up the chain versus cooperate in an environment more conducive to problem-solving, evolutionary planning, flex-planning and experimentation. This big company mentality can be disastrous, as team dynamics driven by a sense of loyalty can often easily encourage individuals to tell the leader exactly what he or she wants to hear, rather than challenge the status quo and tell leaders what they need to hear. This does not apply just to the leadership. Each new hire improves and stretches all of the existing team members in various functional areas beyond their immediate expertise.[2]

Diversity in all forms helps drive “figure out the new” behavior. I recently asked a CEO if he had enough talent. His response was to assure me that he had “15 PhD’s” – impressive for a startup project. But when I asked how many were from outside their market, the answer was none. When I asked how many were under age 35, the answer again was zero. In my view, both are signs of sub-optimal teams. Beyond diversity, hiring tuned to key risks and opportunity is very critical and very different. What I mean by diversity here is not in the generic sense of the word. I mean diversity in very specific dimensions of hiring, which from our experience has shown the highest yield of the high-innovation teams that we are looking for are at Khosla Ventures:


  • Diversity of the team’s problem-solving portfolio, ensuring that the potential failures are spotted early on and that solutions are arrived at faster
  • Diversity of the team’s industry experience, ensuring that the team deeply and comprehensively understands all of the rules and requirements of the field
  • Diversity of the team’s creativity, ensuring not only a culture of livelier conversations and brainstorming sessions, but also an atmosphere of welcome dynamic innovation.
  • Diversity of age, ensuring the mixing of old and new ideas, methods and mindsets, ideally between multiple generations of engineers 

Whenever startups wish to hire to reduce risks, they are inherently discussing inviting and fostering diversity within their team because the risk already implies an expertise not currently presentThis does not represent an exhaustive list of what diversity is, but it offers four readily identifiable categories that the team leaders can target in their hiring process. Ultimately, whenever startups wish to hire to reduce risks, they are inherently discussing inviting and fostering diversity within their team because the risk already implies an expertise not currently present. Alternatively, the expertise might be present, but the risk is so important that it might require additional (different!) expertise from the one already available. The process of gene pool engineering, therefore, is not something akin to an alien procedure – it is the streamlining of what startups do inherently by being startups!


[1] Cook, Scott. “Intuit: Culture of Experimentation.” KV CEO Summit. California, Cavallo Point. 9 May 2011. Khosla Ventures. Web. </culture-of-experimentation-scott-cook>.
[2] For more on how new hires affect the existing team, see our paper, The Art, Science, and Labor of Recruiting.
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Gene pool engineering for entrepreneurs: Why first hires are important (1/11) Fri, 06 Feb 2015 05:12:59 +0000 A founder, sometimes a business person or early CEO and maybe one or two engineers: this is the typical size of a startup team presenting to us for the first time here at Khosla Ventures. Let’s assume that we like the technology, team and market, and decide to fund them. Of course, in every pitch, there’s a lot of talk of funding and development milestones, and there also are outlines for which hires will happen when: “We will hire two more engineers in the first three months and a sales guy once we have a first rev on the product.” As the entrepreneur though, you may never have recruited a team before. You may not even know enough people in the industry to have a clue where to start looking for those engineers or that one right “sales guy.” How many people should you hire? Where should you look? How should you approach them? These are questions that are as important as they are inevitable for every single entrepreneur. Engaging them as early as possible is a key to startup success.


Why First Hires are Important

A strong team is the most important element of a company’s ability to achieve success. That wisdom is often stated but seldom turned into specific “actions.” I would suggest, especially in startups, a company becomes the people it hires. The first few hires help the founders create the environment they will all work in and help drive the product development process. It is also the team that drives (and interviews) all future hires and their ideas and biases get incorporated in the team. More importantly, without the right first few people, the culture of the startup might not be conducive to what the founders envision for its future. On the flip side, a few mediocre or unmotivated people at the beginning of the startup generally spell doom before the first product is released. There is always talk of startup culture, but it is the founders and their first round of hires that define that culture.

A company becomes the people it hires

So how does an entrepreneur find the right people? While entire books and journals are devoted to outlining management techniques and secrets and platitudes about good people are abundant, there are far fewer strategies outlined for building successful and, more importantly, “precisely engineered” teams through an “actionable and teachable” process. The standard corporate practice for both Fortune 500 firms and startup companies is functional recruiting or recruiting to fit a pre-cast organizational structure. While this can work because it creates a familiar working dynamic for a company’s management team, the approach is not sufficient or optimal for the special needs of technology startups. In technology startups, risk management and evolution of plans are the key requirements (hence my statement that a startup becomes the people it hires because they determine evolution of plans and risk/opportunity tradeoffs), more so than standard strategy, operational and business planning and financial management as in more mature companies. Although these big company attributes are also important in startups, much more is needed in a startup environment. In a startup environment, especially in the early days, one is not expected to solely fulfill a specific function – often it isn’t even known what exactly is needed, beyond someone who can add more than just their expertise and contribute to a dynamic culture. 

Successful startups seldom follow their original plans. The early team not only determines how the usual risks are handled but also evolves the plans to better utilize their opportunities and to address and redefine their risks continuously

Experience has shown me that successful startups seldom follow their original plans. The early team not only determines how the usual risks are handled but also evolves the plans to better utilize their opportunities and to address and redefine their risks continuously. One quantifiable, teachable and actionable hiring method successfully practiced by Khosla Ventures for developing the optimal mix of team member backgrounds and maximizing the probability of success is “gene pool engineering.” This process is not constrained to engineering positions, but we have decided to showcase it in this paper as an example. We suspect the applicability of this technique is far broader than just technology startups but the focus here is on technology startups and teams to address the needs for innovation and high-risk management.

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UX recruiting toolkit: Compensation (7/7) Fri, 06 Feb 2015 00:57:34 +0000 “How much does a designer typically make?” The answer to this question varies widely, based on a number of factors:


  • Current comp
  • Comp history
  • Competing offers
  • How long has the company been looking
  • How important is the role to fill
  • How much do you want the person
  • Quality of the candidate’s skills and experience


Websites that report salary data often don’t offer a complete picture, because they are not comparing apples to apples. For example:


  • Not all designers are equal. The term “designer” is really broad. Someone who is mostly self-taught with very thin experience can call themselves a designer as much as someone who has 10+ experience working on deep, complex problems in an environment that is hostile to design.
  • A great “Full stack designer” is a myth. A designer who “does it all” is usually pretty early in their career, so junior that they haven’t had a chance to develop deep skills in a particular area. You may think you are getting a unicorn but you may be actually getting someone who gets the job done but not necessarily really well.
  • Agency salaries are typically lower. Agency salaries bring down the curve, but on the other hand, could be a good place to find designers to hire.
  • Other forms of compensation are invisible in salary surveys. Equity is often not represented in these surveys, and even when equity is included, it is valued differently across companies. Signing bonuses and benefits are also sometimes not represented.


I consulted several UX recruiters about what designers are making these days:


  • At big companies, base salary may be as much as $300-400k (for the top design position in a company, such as a Head of Design or Design Director or VP of Design). Note that this is an extreme high end and not the norm.
  • At larger startups, a Head of Design may make $185-300k.
  • Interaction designer / product designer individual contributors at startups may make $110 – $150k depending on level. User research and visual design make less, with the caveat that compensation varies greatly depending on skill and experience.


A few data points from recent hires I’ve seen directly:


  • “Design Lead”: $150k with .25% equity; post series B company worth 4x more than median series B valuation
  • “Director of Design” with 7 years experience: $120k with 0.75% equity; hired pre-series A company with 12 employees
  • “Designer” with 10 years experience: $158k with $10k sign on bonus, 0.50% equity, seed funded with 22 employees
  • “VP Product and Design” with 6 years experience: $150k with 1% equity; series B
  • “Designer” with 8 years experience: $120-150k with equity between 0.33-1.0%; seed funded


To the extent that you value talented designers as much as you value engineers and product managers, consider paying them the same; it sends a strong signal that you care about design as much as technology and business.


There is a lot of salary inflation that is commensurate with incredible market demand and little supply. Focus on getting people excited to join the company; start closing them before you make the offer. You want designers who want to join your company because they are interested in working on the problems you’re trying to solve, not because you are paying them a lot of money. Conversely, salary should never be the reason designers walk away from a great opportunity they prefer.


Some practical tips:


  • Check out Wealthfront’s startup compensation tool for benchmarking and decide which percentile you want to put your candidate.
  • Consider offering a matrix that shows a tradeoff between cash and equity and let the candidate decide how he/she wants to make the tradeoff.
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UX recruiting toolkit: How to make your company attractive to designers (6/7) Fri, 06 Feb 2015 00:52:47 +0000 These 5 C’s are essential ingredients for making your company attractive designers, based on my own experience of recruiting hundreds of UX people to join companies that were not originally obvious places for designers to join, and based on the experience and advice of two of the best and well-known UX recruiters in our industry.

Charisma of the CEO

A company’s ability to land great design talent has everything to do with how the CEO approaches talent search and recruiting. The best CEOs make themselves available to talk to a large number of candidates, even with “unattainable” candidates, so that they can educate themselves on design. They quickly learn that design is a completely different animal than hiring most other functions. They excel at telling the story of what the company is trying to do, and get people excited about solving the problems they want to solve. They bring excellent soft skills to the conversation.


It’s not enough to find a “great designer” to join the company; you have to find the right “profile”. The content of the company (i.e. the problems they are trying to solve, the domain it’s in) has to be the right “fit”. Find a designer whose passions and interests align with what your company is trying to do.


Designers want to feel like they’re surrounded by other like-minded people, or at least be around people who appreciate what they do. If you have an early stage startup, sell the designer on the opportunity to help shape the culture and the mindset of the company, and make them feel they have your support. Make sure they know they will be heard and will have a voice.


Don’t label and pigeonhole candidates as a certain “type” (e.g. a “visual guy” or “an interaction guy” or a “unicorn”). Talk about the challenges you and your company face and what is interesting about what you’re trying to do. Have a conversation with the designer: make the journey together to discover what the opportunities are, and build trust and rapport to bring the designer to come in and solve the problems with you. Don’t just let it be an “I need you” conversation; let it be a partnership that develops. Both parties need to know they are working with someone they can communicate with. 


Salaries for designers are skyrocketing because there is a tremendous supply/demand issue. See the next section on Compensation for more details.

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UX recruiting toolkit: Interviewing UX candidates (5/7) Fri, 06 Feb 2015 00:48:02 +0000 The Phone Screen

The phone screen is an opportunity to make sure the designer and opportunity are potentially a good fit for each other, based on obvious criteria: salary expectations, role and responsibilities, skills required, potential interest, and communication skills. Ask questions that help you get to know the person and gauge what their superpowers are and what they’re passionate about. Some example questions:

  • Why are you interested in this [opportunity / company]? (Or, if you’re trying to sell them on it, tell them why this opportunity is exciting and worth considering.)
  • What are you working on these days?
  • What kinds of projects and problems do you enjoy working on?
  • What do you consider are your strengths/superpowers?
  • What skills and applications do you use daily?
  • How have you collaborated with other members of your team?
  • What do you not enjoy doing?
  • Is there anything about your current job or previous jobs that you don’t want to do again?
  • (If the opportunity is a leadership role in which they would be hiring and leading others) How do you feel about hiring and managing a team? How much time would you want to spend on design leadership vs. hands on design?


In addition to asking candidates questions, give them a chance to ask you questions as well; this is especially important if you are in “sell” mode and are working hard to get the best talent on board. Tell them what inspired you to start (or join) this company, what the opportunity is, what is the problem you’re trying to solve (from a user’s perspective), who has funded you, and who your advisors are.


The Site Interview

Because you’ll have UX candidates meeting with several people from your team, plan to have the candidate have all (or as many) interviews in one day after your initial phone screen. This way, you can set aside an hour at the beginning of the day for the candidate to review his/her portfolio with the team. Giving the candidate an opportunity to present and show their work is a great way to assess experience, level of taste and sensibilities, problem solving approach, and how he/she thinks. It gives everyone on your interview panel a chance to see what the candidate is done, without burning time in 1:1 interviews where the candidate may not have the opportunity to share, or ends up having to repeat himself / herself over and over again to interviewers.


Preparing candidates for the portfolio presentation

It’s important to set the right expectations for the candidate for the portfolio presentation, otherwise you may find the candidate comes in completely unprepared to share anything meaningful enough for you to make a hiring decision.


Here is an example of what you can tell/send the candidate before they come in for the interview:

The portfolio presentation is a chance for us to get to know your process and your design accomplishments.  You will have one hour to talk about one or two specific projects you have worked on.  An ideal project is one that best illustrates your design capabilities.  Ideally we’d like to see how your experience is relevant to the challenges you would face at our company. 

The presentation can be as informal or as formal as you would like. Some logistical details for the presentation:

  • There will be about 4-5 people present. The group will be comprised of the founder/CEO, engineers and product managers.
  • You will have 45 minutes for your presentation followed by 15 minutes of Q&A.
  • You will have access to a projector.  We expect you to bring your own laptop, but please let us know if you need a laptop for the presentation before you arrive.



  • Assume that everyone present will already be familiar with your resume.
  • Show us your work along with your process. Use specific examples to walk us through your design journey from the beginning to the end of your involvement.
  • If you were working as part of a team, clearly identify your contributions to the process and the final product.
  • Include examples that best illustrate your unique skills, interests, and abilities, and best exemplify your approach as a designer.
  • If you have a particular passion or interest outside of your professional work, feel free to spend the last 5 minutes talking about it.



  • Please don’t show any work that is confidential.  Usually, projects you have worked on in the past that have launched are acceptable to show.
  • Don’t go over your work history in this presentation, since people will already be familiar with your resume.
  • Don’t speak in vague, general terms. The more specific you can be, the better we can understand what you potentially bring to the table.


For user research candidates, you might change the language to be more about the research:

The portfolio presentation is a chance for us to get to know your process and your research accomplishments. You will have half an hour to talk about one or two specific projects you have worked on (including time for Q&A). An ideal project is one that best illustrates your abilities to plan, design, and conduct user research, as well as your ability to communicate insights and demonstrate how that impacted the product or service being developed. Ideally we’d like to see how your experience is relevant to the challenges you would face at our company.


Things to look for during a portfolio presentation

When attending a candidate’s presentation, here are some things to look for (the Four P’s):

  • Project / Product
    • What was the opportunity? Do they understand how this project fits into the larger strategic vision? What user problems were they trying to solve?
    • What was the complexity of the project? The scope of the problem being solved?
    • How is the domain, device, platform, etc relevant to your company? (It’s OK if it isn’t, as long as the designer is a good problem solver and is eager and willing to learn.)
    • Did they initiate the project or was it initiated by someone else? If initiated by them, how did they champion the project and get buy-in?
  • People
    • Who were the target users?
    • What understanding of the users did the designer have, and how did he/she gather insights?
    • Who were the designer’s peers? Stakeholders?
    • Did the designer work as part of a larger design team and if so, what role did he/she play relative to other people on the team?
  • Process
    • How did the designer approach solving the design problem? (For example, did it start with insights about the target users, and if so, how did they gather those insights? Did the designer create several different concepts to test the edges of different points of view? How did the designer iterate and refine the concepts? What role did the designer play during concept and execution? Do the deliverables help stakeholders understand what the tradeoffs are and what should be built?)
    • What role did data have in making design decisions? (In some companies, design decisions are data-driven, and in other places, decisions are more intuitive, or there is no data available. Either is OK; just know what their attitude towards data is and how that fits into how decisions are made at your company. Ideally you have a balance; recognize that some things that count the most cannot be counted.)
  • Problems
    • What kinds of challenges and constraints did they have to deal with, and how did they negotiate that? (Do they take ownership of the problems and proactively try to address them, or are they resigned to play the role of victim?)
    • Is there anything they wish had been done differently? (Look for self-awareness and introspection)
    • What would they do if they had more time? (Good designers think about how things could be better.)
    • What impact did this design have on key metrics (for the product, for the business, etc)?


Including a design exercise

A design exercise is often a useful tool for seeing how an interaction / product / user experience designer thinks and approaches problem solving. It is especially helpful to include this as part of your interview process when recruiting junior designers who don’t have many work samples to show, and/or candidates whose past work is still confidential and can’t be shared with others.

Write the problem statement so that it’s clear what needs to be designed, with some room for interpretation. This is a tricky balance to strike but when done well, you’ll quickly see how they think and approach problem solving. For example, do they take requirements and constraints given to them at face value, or do they think outside the box? Do they expand the scope and think strategically, or are they focused on tactical details? Neither is “better” than the other; the intention of the design exercise is to understand how the candidate thinks, approaches problem solving, and whether their focus is a fit for your needs and culture.


Be aware of some common pitfalls with design exercises:

  • The problem is too big. Thoughtful design takes time, and there is only so much one can do with 1-3 hours of time.
  • The problem is too small. Keep the scope small and specific, but not so specific that there is little room for interpretation. You want to be able to see how the designer interprets the problem, and how broadly they define it before narrowing back down to a particular solution.
  • The problem is too familiar to you. No one has thought about your product more than you have. It may be difficult for anyone to impress you because you’ve already thought about all the reasons why something can or cannot be done.
  • The problem is too unfamiliar to them. If explaining the problem requires a long explanation of what the product is, what it does, and all the requirements and constraints, it’s too big of a problem. Create an exercise that is just familiar enough so the designer can get their head around the problem in a short amount of time. Don’t create a problem that will give some designers an unfair advantage because they are familiar with the domain.
  • The problem isn’t appropriate for assessing what you need. If what you need is a visual designer, don’t give the design candidate a problem that tests their product design skills. On the other hand, if you need a product designer, make the exercise more about the product concept, flow, and interaction model, and less about giving a UI a facelift.


Here are some examples of design exercises that have worked well for me:

For visual design candidates:

Pick any website (or mobile app) you use and redesign it to improve the aesthetics and experience.

  • Describe your observations with the original design: what works well, what doesn’t work well?
  • Specify the scope of what problems you’re trying to solve.
  • Walk through your new design and describe your rationale for design changes you’d like to make.


For interaction design and product design candidates:

Company Y offers a directory of people that users can search and browse to discover other people who share their interests. People can be found based on name, email, location, and interests.




Company X has determined how to find gas prices at all gas stations in the US. Design a product / user interface that allows users to find gas at the best price.


For either problem:

  • Sketch wireframes that illustrate how users would get from the start page of this offering to meeting their goals.
  • Clearly articulate user goals and tasks that need to be supported in the UI and how you would move users through the site to help them achieve their goals.
  • What constraints, requirements, and assumptions are you making with your design? What are the tradeoffs you’re making with the design and why?


There are several ways to include a design exercise in your interview process: 

  • At-home design exercise (for interaction / product designers OR visual designers): At-home design exercises give designers more of a chance to think about the design problem and create deliverables that are higher fidelity than pencil and whiteboard sketches. I recommend giving a suggested time limit (e.g. 3 hours) so time-bound the effort — some candidates will take more time, but at least there is some expectation set. The downside with at-home exercises is that it may be hard to elicit interest from designers to apply to your company if this is required. Carve out time during the portfolio presentation for the candidate to walk through their work on the exercise.
  • Onsite design exercise (for interaction / product designers): An onsite design exercise is given to candidates when they come in for in-person interviews. Give them the written problem, leave them in a quiet conference room for an hour with a whiteboard and markers or paper and pencil, and have them walk through their design. At this level of fidelity, their work is limited to conceptual and flow diagrams and wireframes.
  • Whiteboarding session (for interaction / product designers): For a more interactive design exercise, consider working on a problem together at the whiteboard. This is a good way to gauge rapport and collaboration. The downside is that some designers work better alone, with time to think and incubate their ideas quietly. If you choose to do a whiteboarding session, pick a problem that can be solvable in no more than 30 minutes. Some examples:
    • Design an elevator control pad for a 1000-story building
    • Design an alarm clock for kids
    • Design an ATM for kids


One way to structure interviews with is to schedule a half-day interview for the candidate to come in for the exercise, followed by a presentation of his/her portfolio and design exercise. Afterwards, the team can decide whether to pursue a second round of interviews on another day, or if the candidate is not a fit, less time is spent interviewing a candidate that is not a fit. Alternatively, start with the portfolio presentation, followed by 1:1 interviews. After you decide the candidate is worth bringing back and the candidate has also expressed interest in continuing to talk to the company, then assign the design exercise (or skip the exercise if there is such a large body of work or you have previous experience working with the person).


Assessing the design exercise

Some things you want to look for when assessing a design exercise:

  • How do they define the problem? Do they take the exercise at face value and start drawing screens right away, or do they go beyond the interface and think holistically?
  • Do they understand and state user needs and define goals and tasks?
  • Do they uncover constraints and/or make assumptions about requirements and constraints in order to solve the problem?
  • Do they think visually and generate a lot of ideas before narrowing down to a particular solution? Great designers will understand how to engage in a process of divergent thinking, where they generate a lot of ideas, even if they are crazy, and then converge to viable ones based on feasibility, viability, and usability.
  • Can they articulate their design process and advocate for it?
  • Can they critique their own work? What would they do if they had more time? Do they know what they would do next in order to assess how good their designs are, and move the designs into production?


1:1 interviews

For the most complete picture of the candidate, have the candidate meet with 4-5 interviewers. More than 5 gives you diminishing returns and fewer than 4 is not a strong enough signal to know whether to hire someone, unless they are extremely good or extremely bad. All interviewers should attend the portfolio presentation.

The interview panel should include all the stakeholders for the role and the peers who will work most closely with the candidate. For a head of design, for example, you should include the head of engineering, the head of product, the CEO, and other designers and front end engineers. 

Soft skills are as important as hard skills when hiring UX people. The portfolio presentation and design exercise are the best way to assess hard skills: understanding and applying design principles and process; knowing what good design looks like, knowing how to create it, and advocating for a positive outcome successfully; navigating constraints and requirements to create the best outcome for users. The 1:1 interview is your chance to assess soft skills: self-awareness, social awareness, self-management, and relationship management. These are all ingredients for emotional intelligence which are critical for design success.

Here are ways to assess designers in these four dimensions of emotional intelligence:


Self-awareness (Presence):
Look for: ability to be here now; an understanding of oneself

  • What 3 words would you use to describe yourself?
  • What would you describe as your superpowers?
  • What would your coworkers say about you?
  • What have you learned from your mistakes?
  • What negative thing would your boss say about you?


Social awareness (Empathy):
Look for: ability to know how others feel

  • Give me an example of a project where you disagreed with the stakeholder or client’s direction and tell me how you handled it.
  • Suppose you’ve heard through the grapevine that a key stakeholder has rejected your design and hates it. What would you do?
  • Give me an example of a time when you were able to communicate successfully with another person, even when that individual may not have personally liked you?


Self-management (Adaptability):
Look for: flexibility and versatility; ability to brainstorm alternatives; reactions to change; willingness to throw away work

  • Tell me about a deadline you’ve missed and how you handled it.
  • Suppose you are in an environment where the company is iterating quickly and pivoting frequently. How would you handle that? Would you find that energizing or would that stress you out? How would you manage such conditions so that there is a good design outcome?
  • Through the process of designing a solution to a difficult problem, your stakeholders want to go back to a direction you collectively designed and explored a few weeks ago. Since then, you’ve moved on to another solution. How do you handle this situation?
  • Tell me about an assignment that was too difficult for you. How did you resolve the issue?


Relationship management (Influence):
Look for: ability to notice the needs of others and adapt

  • Tell me about a time when you helped resolve a dispute between others.
  • How do you handle a situation where the boss is wrong?
  • Describe a difficult decision you had to make with your managers / leaders in the company?
  • You are working with a coworker who constantly makes mistakes that affect customers and impact your ability to do your own work. You have tried talking to this colleague, but you have seen no improvement so far in the quality of his/her work. What would you do next?
  • Do you prefer working alone or in a team?


In addition to probing for the skills needed to do the job, get to know the designer better, as a person and as a designer:


Look for: passion and interest in solving the problems you’re trying to solve

  • What has been the most interesting project you have worked on and why was it interesting to you?
  • What do you love doing? What kinds of problems do you enjoy working on? What would motivate you to come to work here every day?
  • Who inspires you and why?
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UX recruiting toolkit: Reviewing candidates (4/7) Fri, 06 Feb 2015 00:41:52 +0000 The Resume

Before looking at the portfolio and when deciding whether to contact a candidate for a conversation, start with the resume to establish some expectations. For example:

  • How many years of experience do they have?
  • Does the candidate have a formal education in a relevant field? Common and acceptable backgrounds include graphic design, human-computer interaction, cognitive psychology, information architecture, and computer science.
  • Has the candidate worked with any notable companies or agencies that are known to have strong design teams?
  • Has the candidate hopped around at a lot of companies (usually a warning sign)?


The Portfolio

After you’ve gained some context for the candidate, take a look at the portfolio. Some things to look for:

  • Does the portfolio look nice? The portfolio is how designers represent themselves and their work. Does it look nice? Does it look professional / does it reflect good taste? Even if the portfolio is for an interaction designer who doesn’t focus on visual design, you want to make sure they understand what good design looks like.
  • Is the portfolio easy to navigate? Can you move through the site easily and quickly? Are they sensitive to the ways in which people want to move around in a portfolio site? How do you feel when you move through the site and look at it?
  • Did they design the portfolio with the target audience in mind? Does the portfolio reflect what the designer’s point of view is, what their strengths are, and provide supporting examples of their work? Do they tell the story of their work, challenges they’ve overcome, and how they’ve solved problems, and not just show static screen shots?


Note that some designers may not have a portfolio posted online, even designers that are really good and very experienced. You shouldn’t rule them out, especially if they come highly recommended. Some designers may not be actively looking for a job but came to you through a referral or a headhunter. Still others may be so busy and/or committed to their current job that they haven’t had a chance to put a portfolio together (and don’t need to).


Next Steps

Based on the resume and the portfolio, assess generally what kind of UX person the candidate is. See how their skills and experience align with the UX skills described in Understanding UX Skills and decide whether the person might be a fit for your needs. A few general buckets you might encounter:

  • New grad: The portfolio is heavy on student projects. Look for potential and ability to learn quickly. Most likely they do not yet have a strong design point of view developed and will need a lot of coaching, but they may have shallow experience in a wide range of skills. Beware the inclination to hire a “jack of all trades” UX person: usually that leaves only the new grads who qualify.
  • Visual designer / UI designer: Usually with a background in graphic design, may have portfolios that don’t say a lot but have a lot of pictures. If you are hiring a visual designer, make sure they understand how to design for interactive use, and can create a consistent brand and visual system that includes grid, layout, typography, color palette, and iconography.
  • Interaction designer: Usually with a background in human-computer interaction (HCI), they may have strong user research skills as well. Try to decipher what was their specific contribution to projects they’ve worked on (many projects are the result of a larger team effort) and what their unique contributions were. Sometimes it’s research, sometimes it’s coding and making prototypes, sometimes it’s thinking through the interaction and product model.
  • User researcher: These portfolios may be the least appealing aesthetically but don’t let that turn you away from the substance which matters more than style for this role. A good portfolio for a research candidate should give you confidence that the candidate can design and execute a variety of user studies (user interviews, field studies, usability studies). A great portfolio will not only cover the actual design and execution of studies, but will include a synthesis of what was uncovered and how insights about users inspired action from the development team and influenced the final outcome.
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UX recruiting toolkit: Sourcing candidates (3/7) Fri, 06 Feb 2015 00:34:35 +0000 “Where do you find designers to hire?” Now that you understand what UX skills you need to have for your team and have written a job description that describes these needs, it’s time to get the word out and start recruiting.

Most designers are sourced from large in-house teams, other startups, design agencies, universities, and online sites where designers congregate. For employers, this article will help you understand how to think about different ways to source candidates and what to look for. If you are a prospective applicant, this article may help you decide how to best conduct your job search or develop your career. If you are a student, this article includes some programs to consider as you pursue your education. While there are many short programs and bootcamps that claim to train people to become designers, they are still relatively new and unproven so I did not include them here.


Targeted outreach

Targeted outreach is among the most effective ways to find someone to hire, especially if the team has prior experience working with good designers and/or has a large network. With your team and everyone you know who might have worked with a good designer, brainstorm a list of all the great people they’ve worked with, reach out to them, and/or ask them to refer other people they’d recommend.


Large in-house design teams

Companies like Google, Yahoo!, LinkedIn, eBay, Apple, Adobe, Intuit, Twitter, and Facebook can employ hundreds of designers and are fertile ground for breeding designers who can work with cross functional teams to ship products. Because they have large teams, junior designers get mentored by more senior designers and are exposed to good design leadership and management practices. Oracle, Salesforce, Citrix, and SAP are enterprise companies that also employ many designers. Be willing to also consider some non-obvious places that aren’t top of mind; for example, I’ve hired some terrific people from and Bank of America.

For early-stage startups looking to hire a mid- to senior designer who can eventually lead, grow, and manage a design team, a designer from a large in-house team who has worked there for 2–4 years makes a great candidate for recruiting into such a role.


Startups and smaller companies

Startups and smaller companies are a viable source for designers, particularly if they have been with the company for 2–4 years and the future of the company is uncertain.

Be aware that some designers who only have experience in startups may lack a mature design process and/or ability to lead or scale a design team as it grows. If a designer’s experience is mostly comprised of a series of short stints (< 18 months) at startups, take time to understand what happened, not just from the candidate’s perspective but also from founders, coworkers, investors, etc.


Design agencies

Design agencies are often filled with young designers who have been mentored by strong design leaders, and some of them are eager to work in an in-house team and have a chance be part of the shipping team and own equity. Many agencies also pay less than large companies can afford to pay, in exchange for working in an environment that values and understands design and gives designers the chance to work on a wide range of projects. Agencies like IDEO, Frog, Method, and Adaptive Path (now owned by Capital One) hire well and train well, but don’t overlook small boutique firms.

Be aware that some designers who only have agency experience may not have sufficient experience with seeing a design through to launch. Make sure you probe on their past collaborations with engineers.


Online sites where designers congregate

Increasingly, designers are posting work samples online to build their reputation and get discovered. Some startups have successfully recruited terrific designers by browsing through online sites for designers and searching relentlessly for portfolios that suit their design sensibilities. Dribbble, Behance, Coroflot, Carbonmade, and Cargo (more for illustration than UI or visual design) are all good sites to look at to find visual designers.

 These sites are great places to find visual designers, but not necessarily user researchers or interaction designers. The product might look great but not work that well. The hardest design work is what comes before the surface layer: the strategy, the vision, the principles, the interaction, the architecture, and these online sites don’t allow you to see beyond the surface.


UX job boards

There are a few job boards focused on user experience opportunities. Consider posting on these sites:


Design recruiters

Many recruiters who specialize in design talent work on a contingency basis or on a retainer. I prefer to work with recruiters who specialize in UX because they understand how to screen candidates and have a good nose for culture fit.

Here is a short list of recruiters I’d recommend. While there are many other recruiters who can help with hiring designers, I’ve ruled many out because they take a “spray and pray” approach, contacting people about opportunities without really assessing whether there is a fit first.


College hiring

New college graduates are challenging for startups because they often lack real-world hands-on experience, and even if they’ve had internship experience, they are too early in their careers to work effectively as a standalone designer and provide leadership necessary to do good design work. If you have a team and/or at least a few senior UX people who can serve as mentors, consider a variety of academic programs for your hiring the skills you need (in no particular order):


Interaction design:

  • Carnegie Mellon’s program in Human-Computer Interaction
  • Carnegie Mellon Master of Professional Studies
  • Stanford University (Symbolic Systems program, d.School, Product Design program, Persuasive Tech Lab)
  • University of Michigan’s School of Information
  • University of Illinois at Urbana-Champaign (Engineering Psychology, Computer Science, Industrial Engineering, Library Science)
  • University of Washington, Human-Centered Design and Engineering
  • New York University’s ITP program
  • UC Berkeley iSchool
  • MIT Media Lab
  • UC San Diego (UCSD) Cognitive Science program
  • School of Visual Arts (SVA)’s MFA in Interaction Design


Visual design:

  • Rhode Island School of Design (RISD)
  • Ohio State (Department of Design)
  • University of Cincinnati (DAAP program)
  • Carnegie Mellon
  • UCLA
  • Illinois Institute of Design
  • California College of the Arts (CCA)
  • Art Center College of Design
  • Otis College of Art and Design
  • Savannah College of Art and Design (SCAD)
  • TU Delft
  • RCA London
  • Goldsmiths London


User research:

  • Carnegie Mellon’s program in Human-Computer Interaction
  • University of Illinois at Urbana-Champaign
  • Cornell University
  • Stanford University
  • University of California at San Diego (UCSD) Cognitive Science program
  • Tufts University
  • Georgia Tech


Consider relocation

Don’t rule out people who are not local. There are good designers that live outside your area, and there are good designers who are eager to relocate. One of the best designers I’ve met at a KV portfolio company relocated from Europe after being “discovered” by the CEO online. The CEO figured it was worth waiting for the visa and relocation to get a great designer of a calibrer that would otherwise be difficult to find and hire in the SF Bay Area.


Good design attracts designers

A final thought on sourcing candidates: designers want to work in companies where they feel the company values what they do. If your product or website looks terrible or if someone coming to your site can’t determine the value proposition for your product from looking at the product, you will have a much harder time attracting designers to join your company. This is a paradox: the companies with lousy designs are the ones who need designers the most, yet most designers interpret bad design as a sign that the company does not value design, or that the company doesn’t understand their own raison d’etre which will make the designers’ jobs that much harder. It is crucial for these companies to (1) represent themselves well, and (2) build a design team with the right attitude: optimistic, can-do, proactive, take responsibility and not adopt a victim mindset.

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UX recruiting toolkit: Writing a Job Description for UX People (2/7) Fri, 06 Feb 2015 00:20:31 +0000 The best thing you can do for your company as founder/CEO is to hire a great team, so it’s worth investing a lot of time and energy into writing a good job description. Even if you are relying mostly on your network to source candidates, you’re likely to need at least a description of your company to circulate to elicit interest from candidates. Designers are getting contacted on a daily basis about opportunities. How is your opportunity going to stand out from others?

A founder (not in the KV portfolio) reached out to me recently asking me to help him publicize an opportunity at his startup for a designer. This was the job description:

ACME is building the next generation resource optimization software to enable recurring activities (tours, ski resorts, amusement parks, zoos, museums….60B+ US only) along with support for consumer transactions (online, mobile, POS) of such activities. This configurable enterprise software stack can be applied to many industries with very large scale consumer usage.

The platform is SaaS based, relying on modern storage architectures(Sql/NoSql), REST based APIs, complex optimization technologies and built to scale. The founding team is led by experienced entrepreneurs and a core team of engineers. Well financed, VC Backed. 

This is a great example of what not to do in a job description for designers. It’s written from the perspective of a technologist with a focus on what technology will be built. The opportunity is not described in terms of who the target users/customers are and what problems it is trying to solve. Contrast the description above with the following descriptions for other companies:

At Webflow we’re constantly building new and exciting features that make web design much faster and easier. We’re looking for someone with a lot of vision and a lot of design experience that can own big product initiatives. There are so many fun and creative ideas that are waiting to be designed and built. If you love designing great user interfaces and you want to leave your mark on the future of web design then you’d be a great fit on our team!

You’ll be involved in every step of the process for designing Webflow products – researching the best possible solutions, creating user flows, designing mockups, designing high-fidelity UIs, and creating custom icons and graphics. Knowledge of HTML/CSS is preferred.

This is a full-time and salaried position that includes health, dental, and vision benefits. We also offer significant equity in the company and awesome perks.



  • Own big design projects (think social platforms, new design tools, and other high-impact projects)
  • Work directly with our engineers, delivering them product specs and assets
  • Work directly with other designers to envision and iterate concepts
  • Contribute to high-level strategic decisions with the rest of the team
  • Compile research and create user flows
  • Design mockups and high-fidelity user interfaces



  • 3+ years of UI design and interactive work
  • A solid design background with an obsessive eye for visual and interaction details
  • Experience designing web apps
  • Ability to think at a high level about product strategy and vision
  • Self-motivated and able to efficiently run with a project without close supervision
  • Basic knowledge of HTML & CSS
  • Understanding of basic SEO
  • Excellent communication skills – you should be able to clearly articulate your design decisions.



  • Have experience building websites (HTML, CSS, Javascript)


HOW TO APPLY: Email your portfolio and resume to

Note: You must have valid U.S. work authorization


Hi, we’re “Homerun” and we’re redefining what it means to sell a home.

We will give homeowners a fair cash offer on their screen in under a minute, saving them 2 to 6 months of time and removing all of the uncertainty of selling a home. This is possible because we will literally purchase the homes ourselves (then resell them on the market). It’s a little bit crazy, but it makes for a much dramatically better experience for customers. In 10 years we hope we will be the only rational way to sell your home.

Here are two articles about us:

We want to hire a thoughtful, empathetic, and experienced designer to build and lead the design team and culture at Homerun.

You will craft the delightful products and identity that will come to represent us. We’re introducing a fair and trustworthy product to an industry known for dishonesty. Your challenge is to overcome that bias and create an experience that earns customers’ trust and love.

If you succeed, you and your work will help define a next generation high-profile startup that changes one of the world’s largest industries for the better.


  • Leading the design of our “version 1.0″ product
  • Developing an iconic and beloved identity for a high-profile startup as it launches and grows. (Think Square, Uber, Tesla, Zillow)
  • Developing products and tools for homesellers, homebuyers (for the property we need to re-sell), home inspectors, and internal teams.
  • Understanding how and where to use data to improve products.
  • Conducting and/or managing the outsourcing of customer research
  • Growing and managing an elite and widely respected design organization

To apply, send your resume and portfolio to


As you embark on your search for UX talent, consider the skills you most need based on your understanding of UX skills. Prioritize the skills and map out what areas you need excellence, competence, and a basic understanding. For example, the profile of your ideal UX hire might look like this:




Compare this profile to these four imaginary candidates:










Based on these profiles, who is the best fit from a skills perspective? That said, if you find a terrific candidate who doesn’t exactly fit the profile of what you are looking for, consider hiring the candidate opportunistically. If your company is growing, chances are you will need that person in a few months anyway. 

Answers to your interview questions and the candidate’s portfolio should give you a good sense for where the candidate’s strengths and interests lie. You can even ask candidates to fill out their profile on a blank grid to get their own self-assessment of their UX skills across this spectrum.




With a candidate profile in hand, you can better understand how the candidate’s skills meets your needs.

 Here are the ingredients for a good job description:

  • Name the role: You may not have the exact job title figured out, but the title on the job description should reflect what you’re looking for in a designer. Use job titles that are more standard in the field to maximize your chances of finding the right person for the role.
  • Describe the company: What is your raison d’etre? Why should a designer care about your company? How will this opportunity challenge and inspire the designer and motivate him/her to work at your company?
  • Describe the job: What will a typical day look like for the designer? What do you expect the person to do? You don’t need to enumerate all the tasks but you should describe what level this role is at, who they’d work with on a day to day basis, who they’d report to, and what a typical day/week might look like.
  • List your requirements and nice-to-haves: Your requirements are the minimum qualifications for the job; the nice-to-haves are what the ideal candidate would have. Requirements may include a specific degree or educational background, where the designer should be located, and number of years of experience in the profession. Avoid listing requirements that don’t add unique value to the description.
  • Tell them how to apply: Tell interested parties what to do if they want to apply. At minimum, provide an email address to which people can send their resume, portfolio, and cover letter.
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The art, science, and labor of recruiting: Getting started (1/11) Tue, 03 Feb 2015 07:00:26 +0000 Congratulations, you are now an executive at a venture-backed company! You survived the presentations, the term sheet shuffle and the due-diligence. Everyone is calling you the Founder (which is true), yet you are actually a technologist, an engineer or just a “great ideas person” with an instinct for the market. But now you have to recruit a team; perhaps, for example, a VP Marketing (maybe you have never been in a room with a real VP Marketing and don’t really know what one does or how to assess his or her capabilities!) Worse still, you might be recruiting a CEO but have never really understood what a CEO does or how to appraise one. How do you evaluate a candidate, especially for a management role that you do not have great familiarity with?

Knowing what you don’t know is important: Unfamiliarity of a role’s key characteristics is not necessarily a barrier for assessment. 

There are specific skills for a position that are important, and recruiting someone who has performed well in a similar position in the right context, scale and timeline is very helpful. You can, and always should, find a knowledgeable person to help assess candidates for pivotal positions such as VP Engineering or Marketing. A good venture capital firm will have, in its portfolio, people who fill similar positions in their other companies; these people can advise you. Their input will not only help you assess candidates, but will also teach you a lot about the responsibilities and potential pitfalls of that position. These are things you may be unfamiliar with and therefore cannot appropriately judge. Not only will a knowledgeable person help you find better candidates (and maybe even candidates who can grow from the small five-person early stage team to the very different manifestation of the same role when the team grows to fifty people…or five hundred), their knowledge may help integrate the new person more efficiently and help you better appreciate the role.

Entrepreneur / manager conflicts often arise from entrepreneurs not completely understanding the real constraints, tasks and roles of their core executive team. A good venture firm will have portfolio founders who have run into this situation and can advise you. At Khosla Ventures we also have operating partners who may be able to advise you.

However, specific skills are not the sole indicator of a candidate’s “fit” within an organization, and this, in my experience, is where novice entrepreneurs make the biggest recruiting errors. Secondly, few entrepreneurs know how to interview a candidate. In this document, I’ll make suggestions and outline techniques I have accumulated over the years to evaluate candidates, moving beyond the positive-sounding surface answers to something much more substantive and useful.


Before we get started, let’s be clear about three things:

  1. Even if you follow every piece of advice in this document, you’re never going to always get it right. Shit happens. Even after thirty years of doing this, I still make these mistakes.
  1. I don’t want you to follow every piece of advice in this document! It’s not a blueprint – it’s a guide and each situation is different.
  1. You may not even have the opportunity to really interview a candidate or reference check them broadly because they are not interested, or they have other offers, or there is not sufficient time. Furthermore, you may not have enough leverage because your opportunity is not yet attractive enough. The realities of recruiting may differ from your ideal scenario.


So, how do you find out what a candidate actually did, how they were really perceived in their previous role, and what they might be capable of? How do you ask questions about a domain you do not fully appreciate the nuances of? Essentially:


How do you get beyond the answers to the truth?

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The art, science, and labor of recruiting: Defining the role (2/11) Tue, 03 Feb 2015 06:50:59 +0000 No candidate is perfect, so clarity about the necessary requirements and more importantly the tradeoffs is vital.

Firstly, there is a functional role for a job and this should be clearly specified; for example, understanding marketing is pretty important for VP Marketing candidates. Secondly, and more importantly (and ironically, usually unacknowledged or even proactively denied by many founders), you should consider non-functional requirements. In entrepreneurial and fast-growth companies, there is far greater need for: team-management skills, leadership skills, recruiting skills, and selling skills (yes, selling skills – every employee sells the product, the company, themselves and other employees, both internally and externally).

Focusing solely on functional requirements misses crucial skills. 

Beyond definable requirements, there’s a need to assess contribution – think of that as “value addition” and the ability to “challenge the senior team’s thinking in a cooperative way.” The latter is more important than the former and mostly ignored in hiring. Why is it important? Well, since the ground rules for markets and competitors are seldom fixed in entrepreneurial environments, every senior team member must question and stretch every other team member, no matter what their functional area. You are usually dealing with new business models, new markets, new channels or new strategies therefore conventional wisdom may not apply. You need a balance between hiring an expert in the area and a great athlete who is flexible and can adopt to your domain. This is what I call experience or gene pool diversity. They need to go beyond their functional skills to contribute to the debate on strategy, competitors, recruiting, go-to-market strategies or product specifications. You get the idea! While not every member of a senior team has to possess an “extra-functional” role, the more members that can contribute, the more agile and responsive the startup will be. This is often the X-factor for many successful organizations.

A key executive should make all existing team members better at their job. 

Prior to engaging with any candidates, compile a brief or a specification for the position. It is important that your whole team agrees on what that specification is. I am amazed at how often major disconnects exist without the team members realizing it. A checklist of:


  • Non-functional requirements

  • Functional responsibilities

  • Value-adds

  • Fit with corporate culture


The brief should be circulated among current key executives and signed off by each. Be careful about where to seek advice. I often say it is important to know whose opinion is valuable in which context. A person isn’t automatically qualified to offer advice simply because they have been a VP Marketing elsewhere. Have they seen rapid growth and big success before? Are they familiar with the requirements of a fast growth, your desired scale, or your big ideas startup?

When you have multiple candidates, assess each against the same criteria defined in the brief and compare the various candidates in a table. This goes well beyond the basic spec, which often does not even exist on paper. Again, use people from your sister portfolio companies to help define a spec for the position. 

Also keep in mind the matter of a team’s “experience diversity,” which usually adds to better discussions, more responsiveness and agility to market circumstances and changes. This is covered separately in our note on gene pool engineering of a team, but should be part of evaluating the final candidates. Engineering in diversity of experiences, markets, even biases into a team, can dramatically increase the probability or scale of a team.

Remember, by the time it has 50-100 employees, a good startup should have two or three senior leaders who can step up and be the CEO, if a change is needed. Keep that in mind during all executive recruiting activity. 

I encourage entrepreneurs and CEOs to create positions for strong candidates – even if that position doesn’t exist. One seldom goes wrong with “collecting talent” even if one does not have a role or can’t afford it! I personally assess the quality of a CEO by determining if they’ve built a strong enough team to meet this requirement. I realize strong is a relative term, but consider asking sister portfolio companies or your venture capitalist to help you assess “strength” against the best teams in your industry.


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The art, science, and labor of recruiting: Sourcing candidates (3/11) Tue, 03 Feb 2015 06:40:19 +0000 Finding great candidates is challenging: it takes dedication, innovative-thinking and focus. Use all your avenues to source candidates.

  • The best sources of candidates are usually the people that know your company and team the best – current employees and your board of directors. 

If your staff is not motivated to recommend their friends and acquaintances, there may be a problem within the team or your company. Do employees think of it as a fun place, or believe in its (your) strategy or (your) management?

  • Tap into the personal networks of you and your team. Stay current and active on sites such as LinkedIn – encourage your team members to do the same. Look for people who have worked at your competitors or other target companies you may want to recruit from. See who your sister portfolio companies looked at and passed on or could not attract.
  • Understand the difference between professional recruiting sourcers and full-range recruiters. The former focus solely on researching and filling your candidate pipeline; you are responsible for screening, “selling,” and recruiting them. Don’t rely on recruiters to recruit for you. Also, don’t wait to start a search just because you already have a candidate. In my experience, such thinking is false economy for critical roles with long-term impact. You want as much choice as possible. You want to ensure that you are getting the best.
  • Contingent or retained recruiters (Contingent you pay only if they find your final candidate, retained you pay up front regardless of whether you hire their candidate – they are focused specifically on your search) are contracted to work specifically on your vacancy. To effectively utilize a recruiter, you must first determine what you are looking for in the position and on which skills and abilities you’re willing to make trade-offs. The more a recruiter understands your specific environment, the better they can match potential candidates. This is a costly resource but if managed effectively can provide leverage and speed to the hiring process.
  • As an aside, rates of turnover and web comments by employees are good indicators of morale in a company. I would highly encourage “help us get better” type of exit interviews for every employee who leaves a company.


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The art, science, and labor of recruiting: Interviewing (4/11) Tue, 03 Feb 2015 06:30:46 +0000 Why interviewing is difficult

Everyone knows the “right” answers to give. How do you decide if what you’re hearing is the truth, and, more importantly, the whole truth? If a candidate was involved in a success (or a failure), what was their real contribution to it? Were they just lucky (or unlucky) to be there?

Be very wary of big titles and perceived authority or experience. 

How do you get behind this façade – “I worked at IBM or Google or the latest hottest company?” Among my biggest mistakes was to automatically believe that the head of the IBM PC business would be a great hire for a PC laptop business at Dynabook. My interviews were too cursory to discover that such a person would fail in an entrepreneurial environment. I was looking for confirmatory data that he was good and not asking the more fundamental question: IS he the right candidate if I did not know his previous title? One strategy is to ask the same question in different ways at different times and then triangulate answers. Do different contexts provide different answers? By the same token, candidates who have seen lots of change, lots of success and lots of failure learn a lot of intangibles that can be very valuable to an entrepreneurial company. This experience matters more than most entrepreneurs realize.

Another common area for error is when an entrepreneur does not know their own limitations. Try to understand what you, as the interviewer, are qualified to assess. Is your lack of experience going to lead you to mis-assess or miss what the candidate offers and even what your needs are? Know what you don’t know and get very good (in all areas, not just recruiting) to know whose judgment to trust on what topic!

Another strategy is to probe beyond the polite reference responses given by “provided references.” Are you getting the real history, performance and perception of a candidate? Additionally, look to read a candidate’s indirect characteristics in each question/answer; often multiple characteristics can be “read’ from the same answer. 

Functional requirements like “experience in distribution channel” are usually over- weighted, whereas more qualitative requirements are under-rated.

In CEO search, “leadership” and “team building” or “aggressive hiring” are far more critical than “domain knowledge”. 

However, in some position or areas where skills are rare, specific qualities (like yield in solar cells or battery manufacturing) may be critical and should be given more weight than “leadership.”

Take a look at Jeremy Allaire’s interview in the New York Times where he states “I’m one of those people who believe that there are certain phases of building an institution when you really shape the DNA of the company. I hired 10 people early on who worked for me directly, who were setting the foundation of the company. You have to get that right, because they’re going to be the people who hire the next 50 to 100 people. The die is cast, and now we’re approaching 300 people. For that foundation, I had a very clear idea of what the DNA needed to be.”[1] We have authored a similar paper called “Gene Pool Engineering” on how to engineer the gene pool of a company to the specific risks and opportunities of a company.[2] It is also important to consider how the candidate’s skills and abilities complement the existing team: do they fill needed functional vacancy and substantially add to the team outside their “area”? A separate paper covers yet another dimension of recruiting, maybe the single most important and most ignored dimension, called “gene pool engineering.” Gene pool engineering of a team to add genes from all areas/disciplines/backgrounds, is vitally important to managing the risks and opportunities a startup has.

It’s not them; it’s you

Your evaluation can depend upon what mood you are in and what unrelated events may have affected you that day or week.

For critical positions try 2-3 interviews, for 2-3 hours each, separated over a period of time. That way, each interview is different; your mood is different and your inquiry uses a different approach.

Cultural “fit” is difficult to determine in a functional interview. Anecdotal history of a person versus the “fabric” of a person is different and unearthing the latter is often challenging. How do they respond in crisis? How much heart they have when things get tough? How much passion? How do you even test for “heart” and passion while still focusing on other functional and non-functional needs? How much energy do they have? How open were they to ideas in the past? There’s no one correct answer to these questions beyond staying aware during the interview process.

Expect about a 67% “hit rate” in your assessment. Mistakes will happen.


A few thoughts about interview technique

Earlier, I mentioned triangulating answers to uncover inconsistencies and get to the truth. When it comes to questions, try to get a response in multiple ways. For example, ask:

  • What did their boss think of their job performance? Where were they right or wrong?
  • What did peers think? Where were they right or wrong?
  • What did direct reports think of the job they did? Where were they right or wrong?

The emotional distance provided by these “third-person” questions, can reveal some illuminating information.

Ask them first – when not discussing a position – about their “strengths & weaknesses” and consistency-check against the questions above for each position a candidate held. Also, cross check with references and their performance reviews from previous jobs. Separate the questions from each other during the interview(s) and look for consistency across answers:

  • What are their strengths and weaknesses? Determine how consistent their latter answers are with their self-described strengths and weaknesses.
  • What were their key contributions? Be sure to assess how realistic and self-aware are they of their contributions.
  • Where have they made the most difference in each job? Observe whether they “show” by specific examples and stories or simply “tell” you through unsupported statements of what they do great at.
  • What would they do over again?
  • What would others say about you? Cross-check consistency with what the candidate thinks employees/bosses/peers would say about them.

The focus of their answers shows you what they think is important – is this consistent with what you are looking for? What are they hiding? That reveals to you how open they are.

Consider what a candidate liked and disliked about previous jobs (look for consistency across questions and their biases/ preferences – as clichéd as it sounds, a leopard does not change its spots and you can rarely teach an old dog new tricks). Also consider a candidate’s self-image. How does it correlate to references? How good are they in assessing their strengths and weaknesses?

Note that it is important, no matter what area you are trying to investigate, to look for what the candidate “shows,” not just “tells.” It’s easy for candidate to simply “tell” you she’s great, but look for specific examples and stories that show how the skills the candidate claims, rather than “statements” about what the candidate did. Have them prove assertions with examples.

Finally, ask them what questions you should ask their references; that shows you what is important to them and what they want to avoid.


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The art, science, and labor of recruiting: Assessing a potential candidate (5/11) Tue, 03 Feb 2015 06:25:31 +0000 Assessing a potential candidate

There are several competencies you will want to consider in key employees: content / knowledge, cultural fit, hiring competencies, motivation, work-style, leadership, values and past performance.


(i) Assessing Domain Knowledge

Test the candidate’s general industry knowledge and their breadth of industry knowledge. It’s important to find those candidates with their finger on the pulse and who are truly curious about the space they operate in. Consider asking:

  • What do they think of other companies’ strategy in the industry? 
  • What do they think of other great companies outside the industry? This shows breadth.
  • What magazines/blogs /news sources do you read regularly? Test to see if they can prove it with real stories. If you are looking for someone broad, then you want someone who reads broadly and has lots of stories and examples that are relevant to topics you bring up. This question can be very useful both within a candidate’s domain and outside it.
  • Describe a problem in their functional area of expertise: What would they do? When? How long do they take to get to decide? Who would they ask for help? 


(ii) Assessing Cultural Fit

Although it’s difficult to determine in a functional interview, the ability to have fun with a team is critical to enhanced teamwork and probability of success. Anecdotal history of a person versus the “fabric” of a person is different and getting to the latter is hard. Consider:

  • How did they respond in a crisis?
  • How much “heart” do they have when things get tough?
  • What’s the best team you’ve been a part of and why?
  • How much energy do they have?
  • How much passion do they have?

It is critical to determine whether the answers to these questions complement your team and their skills and abilities.


(iii) Assessing Ability to Hire and Build Teams

Hiring skills are usually far more important in a leadership role than characteristics such as domain experience. So, it’s crucial to address the candidate’s ability to assess other people and to assess how they think about the team they may build if they were to take the job. Again, specific examples of candidates will get you a better assessment and if they can’t think of specific candidates it should show you a lot.

Can they come up with candidate ideas? Do they apply old models of looking for recruiters, organizational charts, and needs, or do they think of a new situation and get creative?

Every management candidate should be a great recruiter, 
no matter what their area of expertise.

How do you get a clear sense of a candidate’s hiring credentials? Consider asking some of the following questions:  

  • Who is the best manager they have worked with and why? Triangulate with your own perceptions of this person, if applicable or use it to level set the candidate.
  • Who is the best technologist that they have worked with? Triangulate with your own perceptions of this person, if applicable or use it to level set the candidate.
  • What do they look for in a potential new hire for these types of positions or prioritize in key hires?
  • What is their “model” hire for a position? This answer reveals a lot about what the candidate considers a star hire and what he values in himself and others. Consider whether it is consistent with what you want.
  • What do they look for or prioritize in a candidate or in each job they had?
  • Who was their best hire in each job? Best hires and how a candidate recruited them shows you the style, process and bar they set in recruiting. “A” players hire “A” players while “B” players hire “C” players.
  • Who was the most difficult hire they made? In recruiting, I often say a “no” is a “maybe” and a “maybe” is a “yes.” I look for candidates who are aggressive recruiters and team builders – and don’t take “no” for an answer from great candidates.
  • How much new hiring did they do?
  • What kinds of questions do they ask potential new hires when they are recruiting? This answer shows what they value.

Try to assess the type of recruiter a candidate is: Maniacal (good)? Creative (good)? Is their style of hiring similar to your own or different? Are they process-oriented? Do they depend solely on HR or recruiters (bad)? Are they aggressive? How good a salesman are they for new hires? How aggressive, persistent or imaginative is the candidate? Try and assess how much they pursue superstars, especially ones who already know them.

Anybody who is passionate about great people has great recruiting stories to share. Look for specific examples or “battle stories” from candidates. 

Perhaps they pursued somebody despite the odds or despite turndowns“To get my candidate, I parked in a London Hotel for a week and met the candidate every evening after his day job” or “I flew to Chicago under the excuse of ‘I am here already, can we have dinner’ to get a CEO interested in a job.”

Always probe for creativity and imagination in the candidate’s hiring mentality. Ask “who would you bring along?”  The question isn’t solely related to their previous company, but other people in the industry that they’ve been impressed by. A “why” combined with a “who” reveals what they value about their team and how open-minded or creative they can be.

Furthermore, consider where the candidate primarily hired from; mostly internal hiring is not a good sign (although in some big companies it is normal); mostly using recruiters is also not a good sign; a good network is a good sign. How persistent are they in recruiting? Do they just call a recruiter (bad sign) or have broad network or lots of followers?


(iv) Assessing Motivation, Thoughtfulness and Critical Thinking

Earlier in the document, I mentioned the importance of non-functional requirements. But how exactly can you assess them in a “sterile” interview environment?

Firstly, notice how well the candidate prepared for the interview. How well informed they are. Did they review the company website, research competitors or scan the media for relevant stories? Ask boldly:

What do they like about your company? What don’t they like or what worries them? 

Their answer should provide some insight into how interested the candidate is, how much pre-research they have done and whether they are action-oriented. Remember you may need to sell a candidate first and get them interested or excited before the take a keen interest in selling themselves to you.

  • Ask what they look for and what they worry about in various direct and related businesses? Evaluate their answers – were they thoughtful and based on reality or “bluffed,” for the sake of the interview. 
  • What are they most proud of in each job they had? Evaluate level setting and their “standards”. One can understand a lot about the motivation, quality and standards a candidate sets for themselves from the stories they share. Look for contributions beyond their own job function. Are the standards compatible with what you are looking for? Note that it is important, no matter what area you are trying to investigate, to look for what the candidate “shows” as well as “tells.”
  • Have they jumped to new areas? New companies? How risk-averse are they? Examples: some guys explain they were entrepreneurial inside a big company but have been there for 20 years! The flip side, changing jobs every two years is not good either.


  • How many hard questions the candidate asked about your company? A very good sign because you don’t want a “yes man”.
  • How hard did they probe you? This reveals how thoughtful and critical-thinking they are versus how much they “follow the conventional wisdom.” Many executives don’t like to hear about critiques of their company or strategy. Instead of being defensive, listening to a great critique can be very useful, even if you don’t hire the candidate.
  • What is quality of their questions? How insightful are they about your business and about their business? 

Beyond answers, there are some additional signs offered by all candidates if you have the acuity to look for them[1]:

  • Body language. Did they look at you? Open or closed stance? Animated or dead hands? What are their feet saying? Which way do they point? Eyes? Eyebrows?
  • Distract in middle of question: is the candidate focused enough to return to original question (especially if original question is important)?
  • Ask for action items after the meetings (send me x or y!) and look for level of follow-up; how detailed? How motivated? How much did they pay attention to details and revisit key points in the follow-up?
  • In companies, executives don’t always have the luxury to spend weeks creating a “follow-up” document: test the candidate’s ability to think on their feet. Ask:
  • What would they do in the first 90/180 days? Get an immediate answer but also ask for a thoughtful answer as a follow up item. Determine what they are able to produce with a week for research, diligence, and follow-up questions.


(v) Assessing Values

A candidate’s perception of the role that work plays in their life is crucial. Entrepreneurial environments need passionate, dedicated, curious people. Having said that, it’s important not to “cue” a candidate into values questions because people tend to have studied the right answers. Get a sense of a candidate’s values and desires by asking indirect and subtle questions:

  • If this role wasn’t around what would they ideally look for? Assess the quality of their answer and determine their other options. Are the jobs they are considering ones you would value and are they consistent with the candidate’s answers on what they are looking for? 
  • What other jobs are they considering? Why? Determine what they really value versus what they say they value and assess whether the two are consistent.
  • What other roles are they / have they considered? Which ones did they like? Why? Judge quality of thinking and understanding of opportunities, both others and yours.
  • Which roles did they turn downWhy? Assess the quality of thinking and their personality/orientation.

Is the candidate in demand?

Good candidates will be sought by multiple organizations.


(vi) Assessing Work-Style

Entrepreneurial leaders can’t shy away from tough decisions and challenging situations. You need people who are totally committed to making the company a success. Find out:

  • What is the hardest they’ve ever worked? Hardest job? Do they fire people when they need to? How much do they care about the firings? The content and the delivery of these stories are helpful in characterizing people.
  • How do they handle a crisis? What crisis or difficult situations have they been in? What did they do?
  • When have they fired people or motivated people, and what are the stories behind them? What are their greatest achievements in each job? This shows a lot about priorities and personality – especially if they’re willing to admit mistake
  • Describe a problem they’ve had. What did they do? What would they choose as a do-over in each job? How long did they take to get to a decision? Who did they / would they ask for help?
  • How much do they know areas that they did not directly work on? Look for openness and curiosity – it reveals how much they might contribute outside their area. This can be important for startups and its value is often grossly underestimated.
  • If they could have any job, which startup would they work for? Why?


How good is the candidate at evaluating opportunities? Ask them:

  • What business opportunity would you pursue if you got $10 MM to invest in one startup? This represents the quality of their thinking and ambition they can bring to your team and should be consistent with what they value and the other jobs they are considering. Is this what you need/want?
  • In which popular segment of opportunities, if any, would you defy conventional wisdom and stay away from investing? This shows independence and thoughtfulness regarding investment.


How can you test their imagination?

  • What would be a game changer in their current job/business? Assess their ability to look beyond conventional wisdom.
  • How would they define the job they would pursue if the current position was not open? What if their position was open at their favorite startup? More detail and more exciting ideas say something about the candidate and what they value, think about, etc, whereas answers with no detail behind them is a bad sign. “I will think about it and get back to you” is ok, as it shows a more thoughtful person.
  • How do they answer questions they don’t know answers to? Pay attention to whether they make up an answer versus be thoughtful.
  • How well do they think on the fly in new areas? Find out whether they focus on key questions to find out about (good sign) versus just blurt out answers (bad sign)
  • How do they make decisions? How do they make critical decisions in each job? Discover whether a consistent pattern emerges.
  • Do they take responsibility for failures? Why did it happen? Accountability is key.
  • How local or global is their thinking?
  • When have they shown leadership in a non-obvious situation? Determine how subtle or sophisticated can they be.


What do you think about their judgment?

  • How did they work with “hard to handle” people?
  • When did they make a bold decision? What do they consider bold?
  • Are they driven by gut instinct or process? Do they know when to use each?
  • Are they able to make both process-oriented and rapid-fire decisions?
  • Who is the best person they have worked with at a variety of levels (e.g., CEO, CFO)? Why? This informs you what they value.


(vii) Assessing Past Performance

Judging a candidate in each of their past roles is hard. All too often, I hear “I did well” or “the circumstances were bad,” or “I was working with a bad strategy/boss” etc.

How do you get to the story behind the story?

How do you keep your biases from interfering with this assessment (as the receiver can be just as biased/error prone as the sender)? Consider these areas of exploration:

  • Discuss frustration or satisfaction with each situation or job they’ve been involved with. Reasons for change indicate what is important to the candidate. Try to get to the truth about why a candidate did not like or was not liked in their previous role. This approach needs subtlety/indirect questioning in questions to get to honest answers.
  • Look for hints of what a candidate’s superiors thought of them. What do they think of the boss? Who got promoted and who was given greater responsibility? Why not this candidate? Getting promoted is usually good but can be bad, depending upon that situation and your requirements.
  • What was the career trajectory of the peers who the candidate admired? What does that say about the candidate? How did candidate work with peers they admired or did not admire?
  • How many people can the candidate get to follow them? This may signal how good they are or how good a team leader they are (which are different things and appropriate at different stages of a company). The best reference for a person is through team members following them to a subsequent job or a boss pulling them into a new job. A candidate who did not bring a lot of team members along to a new job probably is not well liked or did not build a great team under them. I ask the question “who did you hire into your new job?” for each position a candidate held.
  • How much ownership do they take or do they follow the blame game?


The track record of a candidate is generally obvious. There is valuable learning from being part of success but a separate learning from what a candidate accomplished versus what others around him accomplished or where the candidate got lucky being at the right place at the right time. Remember, you are looking to determine what role the candidate played in a success while also determining how much they learned from that success. Again look for “show” not “tell.” What specific examples can they give you about their contributions (can this be verified by references?) and their learnings? Remember that success has many fathers! 


(viii) Assessing Leadership Competency

Consider the following leadership competencies when asking questions:




(ix) And It’s Not Just About The Candidate…

You’re not there to simply ask questions and review answers. In addition to your evaluation, you need to sell. The interest-level of a candidate is directly tied to how much you sell the opportunity. You cannot delay the sales-pitch until after the interview! You want to know how a candidate behaves when they are really interested, trying hard and really want the job.

And then there’s the tricky problem of perceived seniority. How do you conduct an interview with a much more experienced person? It is hard for a young entrepreneur to interview somebody many years their senior. You need to sell while evaluating them AND be respectful to get their defenses down. Keep in mind it is not easy to be interviewed by a less experienced and much younger person. Try not to make a candidate feel interviewed. Try to make them feel like you are selling them on an opportunity. Be sure to think about questions that are appropriate for somebody with their experience, background and biases.

Above all: be sensitive.

Also remember that you’ll sometimes have to sell the opportunity before you actually interview a candidate – they may not be interested (yet)!

If you decide to progress to a second interview, do it after some reference checking. Try to probe into questions raised by the referrers and confirm key suspicions by asking about the same thing in a different way.

[1] Navarro, Joe, and Marvin Karlins. What Every BODY Is Saying: An Ex-FBI Agent’s Guide to Speed-reading People. New York, NY: Collins Living, 2008. Print.
[1] Allaire, Jeremy. “How to Shape the DNA of a Young Company.” Interview by Adam Bryant. The New York Times 22 Jan. 2011, Business sec. Web. <>.
[2] Khosla, Vinod. “Gene Pool Engineering.” Khosla Ventures. 1 Oct. 2012. Web. < /gene-pool-engineering-for-entrepreneurs>.
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The art, science, and labor of recruiting: Other sources of information (6/11) Tue, 03 Feb 2015 06:10:11 +0000 Whenever possible, get copies of performance reviews from previous jobs. Ask candidates to submit these late in the process to make sure answers are not tuned to what is already in the reviews. Having said that, don’t “over read” the reviews as your needs and their old situation may differ. Also remember that most big companies that conduct reviews (even small companies should but don’t often do them) are not entrepreneurial and define jobs pretty linearly and are often political.

What do the reviews say? What does the candidate believe their boss / peers / direct reports would say they did well? How does it compare to candidates self-assessment of strengths and weaknesses?

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The art, science, and labor of recruiting: Reference checking (7/11) Tue, 03 Feb 2015 06:00:38 +0000 Aim to conduct references with those names provided by the candidate, in addition to unsolicited references. It is often easy to ask a given reference “who would have a different or less positive view of the candidate?” or “who did not get along with/agree with them?” Ask for specific references – last boss, employee who has worked with the candidate the longest (maybe even went with them to another company), their toughest peer they worked with, etc.

It’s simply too important to leave reference checking to a recruiter. I suggest you and your team conduct references and have a list of areas you want to double check. Each reference will be able to attest to only certain issues and be sure to assess who is qualified to give you an opinion and on which aspects of the candidate.

I often ask for three types of references (both for roles in which they performed well and performed poorly): peers, bosses, and employees who worked for the candidate.


When asking reference questions:

  • People tend to give polite, generally good references. Dig deeply and indirectly. Look for what the referrer doesn’t want to talk about. Respectfully get beyond the standard responses. Also look to characterize the kind of person the referee is. Is he always positive or always negative? How hard a grader? Polite or honest? 
  • How does the candidate compare with other employees? Is the candidate the smartest person on that group? Ask for examples and force them to show versus tell. It is easy for a referrer to say “he is smart” or “aggressive” but harder for them to give examples that illustrate the candidate is “smart” or “aggressive” especially relative to others. Lying directly about direct comparison is harder for people.
  • Do the referrers’ opinions coincide with what the candidate believes their own strengths and weaknesses are?
  • Has a referrer kept in touch or had coffee regularly with the candidate? Consider the social skills of a candidate – a candidate who did not keep in touch with a good boss (or worse does not know what they are doing) is signaling something important.
  • Why didn’t they hire the candidate in their next job? Or keep in touch? Think about what the referrer’s actions, not just his words, say about the candidate.
  • Listen for what topics the referrer is not talking about.
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The art, science, and labor of recruiting: Making the decision & following up (8/11) Tue, 03 Feb 2015 05:50:09 +0000 The following must be addressed internally to ensure a smooth(er) recruiting process:


  • Who is responsible for making the hiring decision? Is it a single individual with others’ input or a team decision? 
  • Who needs to provide input to the decision?
  • When is the decision needed?
  • How and who will contact unsuccessful candidates?
  • Once the decision is made, who should be informed?
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The art, science, and labor of recruiting: Integrating into the team (9/11) Tue, 03 Feb 2015 05:40:38 +0000 Once the offer is accepted it is critical that you begin to bring the person into the team. This will make dealing with counter-offers much easier and gets them excited and committed to your opportunity.


  • Have a specific plan of who they should meet with on day one, first week, 30 days, and 60 days.
  • Have a specific communication plan on how the hire will be announced – who needs to know and when?
  • If appropriate, determine a mentor that can help guide them into their role and integrate with the team
  • Determine specific “follow-up” points to share feedback on performance; it is critical to keep the lines of communication open to ensure a smooth transition 

No one gets it right all the timeOne final point on integration into the team: if it becomes clear that a new team member is a poor hire, it is important to quickly and decisively take action. A bad fit in a key role can be seriously detrimental to a young organization and it is critical to prevent this from happening, whenever possible. As I mentioned previously, no one gets it right all the time and even after thirty years of doing this, I still make these mistakes. The important point is not to let a mistake fester and cause unnecessary problems on the rest of the organization. In addition, it is sometimes useful to conduct a “post-mortem” to determine what went wrong in the process in order to try and prevent it from happening again (of course, the key takeaway of a “post-mortem” can sometimes be: shit happens).

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The art, science, and labor of recruiting: “Finally” (10/11) Tue, 03 Feb 2015 05:30:59 +0000
  • If you really want someone, always believe a “no is a maybe” and a “maybe should be a yes”!
  • Understand that post-offer follow-up is critical. Do it more than once.
  • Prepare the candidate for resignation. Ask them, “what will you do if your current employer offers you the moon?” Many candidates are lost after they accept a new position. Prepare them for a “massive counter offer” and have them think through how they would respond to that!
  • A venture can only progress so far on the strength of ideas alone. I’ve seen companies with amazing products and killer ideas fail because of a weak leadership team; conversely, I’ve watched a stellar executive lineup transform mediocrity into unbelievable success.

    Organizational culture is not created on paper. It’s a dynamic, living organism that evolves every time you add someone new to the team. Mistakes will happen, but the team should be cohesive enough to shake them off. Be unrelenting in your quest for the best possible employees who complement each other. It’s time-consuming and often challenging but remember: the team you build is ultimately the company you build.

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    The art, science, and labor of recruiting: Appendix (11/11) Tue, 03 Feb 2015 05:20:40 +0000 List of key questions to ask during an interview


    Job performance:

    • What were their key contributions?
    • Where have they made the most difference in each job?
    • What would they do over again?


    Feedback from others:

    • What did their boss think of their job performance?
    • What did peers think?
    • What did direct reports think of the job they did?
    • What are their strengths and weaknesses?
    • What would others say about you?


    Domain Knowledge

    • What do they think of other companies’ strategy in the industry?
    • What do they think of other great companies outside the industry?
    • What magazines/blogs /news sources do you read regularly?
    • Describe a problem in their functional area of expertise: What would they do? When? How long do they take to get to decide? Who would they ask for help?
    • How much do they know areas that they did not directly work on?
    • If they could have any job, which startup would they work for? Why?
    • What business opportunity would you pursue if you got $10 MM to invest in one startup?
    • In which business opportunities, if any, would you defy conventional wisdom and stay away from investing?
    • What would be a game changer in their business?


    Hiring and Building Teams

    • Who is the best manager they have worked with and why?
    • Who is the best technologist that they have worked with?
    • What do they look for in a potential new hire for these types of positions or prioritize in key hires?
    • What is their “model” hire for a position?
    • What do they look for or prioritize in a candidate or in each job they had?
    • Who was their best hire in each job?
    • Who was the most difficult hire they made?
    • How much new hiring did they do?
    • What kinds of questions do they ask potential new hires when they are recruiting?
    • What kind of recruiter are they? Maniacal (good)? Creative (good)? Is their style of hiring similar to your own or different? Are they process-oriented? Do they depend on HR or recruiters (bad)? Are they aggressive? How good a salesman are they for new hires? How aggressive, persistent or imaginative is the candidate?


    Motivation, Thoughtfulness and Critical Thinking

    • What do they look for and what do they worry about in various direct and related businesses?
    • What are they most proud of in each job they had?
    • Have they jumped to new areas? New companies? How risk-averse are they?


    What they value in a position

    • If this role wasn’t around what would they ideally look for?
    • What other jobs are they considering? Why?
    • What other roles are they / have they considered? Which ones did they like? Why?
    • Which roles did they turn down? Why?


    Performance in new role

    • What would they do in the first 90/180 days of this job?


    Work Style

    • What is the hardest they’ve ever worked? Hardest job? Do they fire people when they need to? How much do they care about the firings?
    • How do they handle a crisis? What crisis or difficult situations have they been in? What did they do?
    • When have they fired people or motivated people, and what are the stories behind them? What are their greatest achievements in each job?
    • Describe a problem they’ve had. What did they do? What would they choose as a do-over in each job? How long did they take to get to a decision? Who did they / would they ask for help?
    • How would they define the job they would pursue if the current position was not open? What if their position was open at their favorite startup?
    • How do they answer questions they don’t know answers to?
    • How well do they think on the fly in new areas?
    • How do they make decisions? How do they make critical decisions in each job?
    • Ask them to describe a time they took responsibility for a failure? Why did it happen?
    • When have they shown leadership in a non-obvious situation?
    • How did they work with “hard to handle” people?
    • When did they make a bold decision? What do they consider bold?
    • Are they driven by gut instinct or process? Do they know when to use each?
    • Are they able to make both process-oriented and rapid-fire decisions?
    • Who is the best person they have worked with at a variety of levels (e.g., CEO, CFO)? Why?
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    Forbes / The next technology revolution will drive abundance and income disparity Fri, 07 Nov 2014 07:15:25 +0000 This post also appears on

    There have been and will continue to be multiple big technology revolutions, but the most impactful on human society may be the one that finally builds systems with judgment and decision-making capability more sophisticated and nuanced than trained human judgment. Machine learning, sometimes called big data or artificial intelligence, is making rapid progress in complex decision-making (for instance: driving a car was thought to be too difficult for computers even five years ago). Without speculating on what is probable, it is at least possible that such systems may even be better at creativity, emotion and empathy than human beings (for instance: writing the best music, love story or creative fiction). At the very least these systems may be able to handle much more data to which we now have access and use it to make better judgments than humans with their supposed instinct, gut, holistic and integrative decision capability. Although any one software program may not do everything a human brain can do, specialized programs will likely make decisions and predictions in their domain better than most trained humans. Many, if not most, domains will be well covered by such programs. Many problems in our work environments aren’t ones the human brain evolved to solve for in the African savannah. To achieve these goals, a machine learning system does not need to exactly replicate the brain or even use brain like techniques.

    While the future is promising and this technology revolution may result in dramatically increasing productivity and abundance, the process of getting there raises all sorts of questions about the changing nature of work and the likely increase in income disparity. With less need for human labor and judgment, labor will be devalued relative to capital and even more so relative to ideas and machine learning technology. In an era of abundance and increasing income disparity, we may need a version of capitalism that is focused on more than just efficient production and also places greater prioritization on the less desirable side effects of capitalism.

    Let’s look at the scale of change that the new machine learning and data revolution may bring and why it potentially could be different than prior technology revolutions like mobile phones, accessible computing and automobiles. Just in the Khosla Ventures portfolio alone, entrepreneurs already are trying to use machine learning technologies to replace human judgment in many areas including farm workers, warehouse workers, hamburger flippers, legal researchers, financial investment intermediaries, some areas of a cardiologist’s functions, ear-nose-throat (ENT) specialists, psychiatrists and many others. Efficiency in the business world generally means reducing costs, which results in using fewer well-paid but highly skilled minds and the technology they develop or capital to replace lower paid and less skilled workers. 

    Our portfolio represents only a tiny fraction of the efforts around machine learning. Consider replacing taxi drivers (Google’s driverless cars), IT administrators (Grok on Amazon Web Services) and even hedge fund traders. Renaissance Capital, one of the top performing hedge funds that has consistently topped the Standard & Poor’s 500-stock index, does not hire traditional Wall Street talent like analysts but instead uses machine intelligence. “The firm’s scientists tap decades of diverse data in Renaissance’s vast computer banks to assess statistical probabilities for the direction of securities prices in any given market.” Another machine learning system even performs difficult jobs like scheduling night workers for the Hong Kong subway system, the busiest and most efficient in the world. These are not just traditional low skilled jobs susceptible to replacement.

    In past economic history, each technology revolution—while replacing some jobs—has created more new types of job opportunities and productivity improvements, but this time could be different. Economic theory is largely based on an extrapolation of the past rather than causality, but if basic drivers of job creation change then outcomes may be different. Historically, technology augmented and amplified human capability, which increased the productivity of human labor. Education was one method for humans to leverage technology as it evolved and improved. However, if machine learning technologies become superior in both intelligence and the knowledge relevant to a particular job, human employees may be rendered unnecessary or in the very least, they will be in far less demand and command lower pay.

    Machines with unlimited and rapidly expanding human-like capabilities may mean there will no longer be as much need to leverage human capabilities. In fact, there may be little for humans to augment or amplify even as productivity per human hour of labor increases dramatically all while far fewer people are needed for most tasks. This is not to say all human functions will be replaced but rather that many, and maybe even a majority, may not be needed.

    It is possible that machine learning technologies in the next 50 years will create a greater abundance of goods and services than we could imagine. Initially, machine intelligence will exceed human judgment in a few narrow areas and then, more broadly over time, will increase traditional measures of productivity and increase economic growth over where it might otherwise have been. In my view, capitalism is very good at promoting efficiency but now has moved to demand generation, making us want things we did not know we wanted. I suspect this trend will persist and the demand for goods and services will continue on an upward trajectory.

    Many like Steve Rattner and Marc Andreessen have written on the subject of technology and proposed arguments ranging from Luddism and the “lump-of-labor” fallacy to economist Milton Friedman’s take that human wants and needs are infinite. I suspect they are right but that does not mean we will not see increasing income disparity with the next machine learning based technology revolution. Others like Erik Brynjolfsson are more contemplative but still miss the difference between past technology revolutions and machine learning technology.

    The traditional view is that historically over time as jobs have been displaced, new ones have been created and to think otherwise is a Luddite fallacy. Steve Rattner argues that technology comes down to the concept of producing more with fewer workers or becoming more efficient (what economists call “productivity”). Without higher productivity, wages and standards of living cannot go up. He goes on to state that as technology has changed the nature of work—more specialized training is now required for many jobs—and consequently, it has contributed to a sharp rise in income inequality. We should be embracing technology not fearing it and that means educating and training Americans to perform more skilled jobs. He agrees that not every worker can be retrained, and so we must help those who aren’t suitable for new jobs with more robust social welfare programs, but he seems to treat it as a minor, not major problem.

    What if machines, which may soon exceed the capability of human judgment, do most jobs better than humans even if people receive additional training? The magnitude of the problem of displaced workers and increasing income disparity especially in the face of abundance (increasing GDP) may become substantially larger. It is possible that this particular technology revolution does not allow for human augmentation and amplification by technology to a large enough degree and that education and retraining are not solutions at all, except for a very small percentage of the workforce. As Karl Marx said, “when the train of history hits a curve, the intellectuals fall off”. Extrapolation of our past experiences, a favorite technique of economists, may not be a valid predictor of the future—the historical correlation may be broken by a new causality. Efforts at estimating the number of jobs that are susceptible to computerization underestimate how technology may evolve and make assumptions that seem very likely to be false, similar to past “truths” (like the waning correlation between productivity and income growth for labor). Even with this underestimate, researchers concluded that of the 702 job functions studied, 47-percent are at risk of being automated.

    I am not advocating for slowing technological change to preserve jobs but rather worry that the machine learning technology revolution will lead to increasing income disparity, and disparity beyond a certain point will lead to social unrest. I grew up a fan of some inequality (read “incentives to work harder”) but lots of social mobility. I suspect that if and when software systems exceed the capability of the median, and eventually the best humans in judgment and skill, an avenue of personal growth through education that previously has always been open for labor advancement may be closed (note that when I say “software systems”, I do not mean robots alone as I believe there is a large and non-linear difference between general productivity technologies and technology that surpasses human judgment capability, although other revolutions like robotics, mobile technology, computing power and others all enhance and leverage machine learning).

    It is happening in every type and level of job from farm work to radiology, warehouse work to legal research and taxi drivers to medical specialties like robotic surgery and medical diagnosis. Some new jobs will be created but given the need to exceed the capability of intelligent, fast learning and ever evolving software systems, the typical human will not be able to keep up in most tasks even if the overall supply of cheaper goods and services is increasing and GDP growth is healthy. Even with access to better education and skills, not enough humans could adapt quickly enough to outperform intelligent software systems. It seems likely that humans will lose this “race against the machine” in many, if not most, work domains causing a large shift in employment much like the transition away from an agrarian economy in the early 20th century. First, we lost the physical labor battle to engines, and now, we may lose the mental labor battle. What else may humans offer? Creativity is an option, but machines may even get better than humans at that, too.

    For instance, David Cope is stretching machine creativity by inspiring questions as to whether or not great new music can emerge from the extraction and recombination of patterns in earlier music using computers. Will the deepest of human emotions be triggered by computer patterns of notes? According to Wired magazine, “The result is astounding to even the casual listener—rife with emotional complexity and deep textures that belie the music’s artificial origin.” Will these kinds of developments replace human capability or enhance human experience? Both the argument that there will be new kinds of jobs and new creativity unleashed rings true. Before the film camera, there was no job for a film producer. Entire industries have erupted. For instance, entertainment has become more popular, and extreme sports has turned into an income generating profession for many. Snowboarding, which before was not a profession, now is. Etsy and EBay have facilitated global artisans and entrepreneurs. New technology will most likely enable an entirely new world of professions. For instance, Wattpad has enabled a bevy of new creative writers. Others, like Pinterest and Tumblr, have provided people with an outlet for their creativity and allowed them to be more expressive about their tastes and individuality.

    Will new jobs be based on human intelligence or creativity? It seems likely that the top 10 to 20-percent of any profession, be they computer programmers, civil engineers, musicians, athletes or artists, will continue to do well. What happens to the bottom 20-percent or even 80-percent, if that is the delineation? Will the bottom 80-percent be able to compete effectively against computer systems that are superior to human intelligence?

    Productivity may increase average incomes while reducing both median incomes and the Gini coefficient (a measure of statistical dispersion intended to represent income distribution). Ironically, citizens in developed countries like the U.S. could conceivably have a higher standard of living even though income disparity may widen. Many economists argue for increasing access to education and skill development (which itself will be delivered via technology), but will that be sufficient to stem the growing income disparity? The traditional recipe for education and retraining may become far less relevant in the face of rapidly increasing capabilities of machines, even in areas that were previously considered human strengths like integrative judgment, knowledge, complexity and creativity.

    Marc Andreessen argues that the subtext to the argument that “this time is different” is that “there won’t be new ideas, fields, industries, businesses and jobs”. He compels us to consider a thought experiment, “Imagine a world in which all material needs are provided for free, by robots and material synthesizers.” I believe the subtext of this assumption is wrong; if we wait long enough, the utopian world for which we strive is in fact, possible—that’s the technology optimist in me.

    He goes on to hypothesize:

    Housing, energy, health care, food, and transportation – they’re all delivered to everyone for free by machines. Zero jobs in those fields remain…. What would be the key characteristics of that world, and what would it be like to live in it? For starters, it’s a consumer utopia. Everyone enjoys a standard of living that kings and popes could have only dreamed of.

    In fact, at two-percent per capita income growth for a hundred years, someone making $40,000 annually today will, in the future, make real income in today’s purchasing power of almost $300,000 (assuming that the cost of goods and services stays the same). I suspect cost of living at a certain standard in our future utopian society will further decline, thus buying substantially more for the individual who today earns $40,000 annually than someone making $300,000 annually today can buy. Happily, technology will be even more deflationary for goods and services than outsourcing to China has been over the last decade or two.

    Going even further, Andreessen writes,

    Since our basic needs are taken care of, all human time, labor, energy, ambition, and goals reorient to the intangibles: the big questions, the deep needs. Human nature expresses itself fully, for the first time in history. Without physical need constraints, we will be whoever we want to be.

    I agree that the main fields of human endeavor may be culture, arts, sciences, creativity, philosophy, experimentation, exploration and adventure. The real question is whether or not everyone will be able to participate. Will everyone be able to keep up on the income curve and leverage new technologies equally if the rules stay as they currently are?

    This new quantum jump in computer capabilities will likely lead to increasing income disparity and abundance at the same time. It is possible that this time the technology evolution really is different, because for the first time, it is not about productivity enhancement but rather exceeding human intelligence. If this scenario comes to fruition, we will need to make structural changes in our social and political systems to optimize for fairness or whatever we determine are our society’s goals (that is, if we can agree on goals at all).

    So, how do we address the issue of income disparity? The easy answer seems to be what Thomas Piketty has advocated: some form of income redistribution. I suspect it will be a necessary component, but it should be the last resort. Our capitalist system is easily biased with some arbitrary policies in favor of labor or capital or new ideas as is common in the innovation and entrepreneurial economy. Giving a research and development (R&D) tax credit back to companies will favor R&D and innovation, whereas giving favorable depreciation is a bias towards capital instead of labor. Keep in mind that larger incumbents tend to shape more of the rules and regulation, at least in the US.

    Requiring corporate healthcare makes labor more expensive and disadvantaged relative to countries, like many in Europe, that provide centralized healthcare. The cost of labor or the cost of capital can be effectively altered by simple changes in rules, regulations and laws; many of these biases have been engineered into today’s seemingly neutral capitalist economy. More and significant manipulation will be needed to achieve reasonable income disparity goals. Income or social mobility is an even harder goal to engineer into society’s “rules”. I suspect the situation will become even more complex as traditional economic arguments of labor versus capital are upended by a new factor many economists don’t adequately credit—the economy of ideas driven by entrepreneurial energy and knowledge. This last factor may become a more important driver of the economy than either labor or capital.

    These are mere speculations and the future is nearly impossible to predict. Hence a word of caution is necessary in recommending any specific solutions or premature action at a national scale that may be drastic or irreversible. Debate and discussion are definitely called for. Point solutions for those hurt by the increasing income disparity need to be found, and the well off should be willing to tilt the playing field somewhat towards those who are not as fortunate. Local disparities (like housing in San Francisco as technology firms grow rapidly and non-technology workers get crowded out) may need temporary solutions, but structural changes at the national level will probably be necessary over the long term in order to solve the larger side effects of technology exceeding human capability. Economic policy will need to include not just economic growth tuning as the U.S. Federal Reserve does today but also be driven by disparity and social mobility biases.

    As an unapologetic capitalist and technology optimist, I will argue for the continued rapid support and deployment of machine learning systems. Let’s not slow down the hand of the market or technological progress but rather realize human labor may be devalued in many instances putting downward pressure on wages of lower-skilled workers and even many higher-skilled workers. These represent just some of the looming challenges as we continue on the path towards technological progress. We must be thoughtful about the society we live in and the future we create.


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    TechCrunch / Could a Nobel Prize-winning innovation have almost been overlooked by Silicon Valley? Thu, 09 Oct 2014 06:26:02 +0000 This post also appears on TechCrunch.

    I want to congratulate Shuji Nakamura, the founder of Khosla Ventures portfolio company, Soraa, and his fellow collaborators who were awarded the Nobel Prize in Physics today. They join an esteemed group of Nobel laureates that includes Albert Einstein, Marie Curie and Niels Bohr, all of whom have fundamentally changed the course of human history. 

    In 2001, after reading a technical article written by Shuji about GaN on GaN LEDs, we began a series of conversations spanning the course of seven years about the potential magnitude of the technology’s application to lighting. These conversations eventually led to Shuji starting Soraa in 2008.

    Today, the Nobel Prize committee has finally recognized this groundbreaking work. “The LED lamp holds great promise for increasing the quality of life for over 1.5 billion people around the world who lack access to electricity grids: due to low power requirements it can be powered by cheap local solar power.”

    Most of Silicon Valley has turned its back on the groundbreaking research required to ultimately transform how people live. Rather than focusing on lighting the world, investors are too often myopic about understanding or investing in this kind of high-risk, deep scientific innovation. True innovation is hard; Even the Nobel Prize committee has recognized that Shuji and his partners, “succeeded where everyone else had failed. 

    Physics based technology development and startups are extraordinarily difficult as many valuable things are. Today, Soraa is the only GaN on GaN LED in the world, and it’s on a trajectory to be the most efficient LED lighting technology by far. In the Silicon Valley tradition, Soraa defied conventional wisdom that their technology was too expensive and impractical. Many pundits advised against their approach, but today, GaN on GaN requires 80-percent less capital expenditure (CAPEX) and 80-percent less material to produce the same amount of light as a conventional LED. Further, Soraa’s LEDs lasts far longer and produce fundamentally better quality light than any other lighting technology today.

    Soraa is now on its third generation of LED products, and its future is promising but success was not always obvious. On multiple occasions, the technology was at risk of never seeing the light of day. The company nearly failed multiple times for lack of funding and required many bridge financing rounds, short-term payroll patches and even personal loans of substantial magnitude for this impactful technology to survive. Because of our persistence, we are now fortunate to be large financial stakeholders but only because it was hard to find co-investors.

    Many times, we weren’t sure we’d be able to sustain such an ambitious undertaking. It took real perseverance through difficult periods by the founders and management team to get to where Soraa is today. At one point, a KV operating partner even served as the interim CEO. Although Soraa may not be considered a complete success just yet and lots of hard work still remains, it is doubtful that this technology will disappear today, as was the risk just as recently as a year ago.

    Notwithstanding the rapid growth in revenue and success over the last year, there were still challenges in the past including securing additional financing, which was especially difficult because the company was categorized as a cleantech investment. In fact, other notable entrepreneurs working on world-changing sustainable energy efforts, like Elon Musk, went through similar turbulence to secure funding. Tesla had more than its share of near death experiences, and Elon personally provided financial support, red-lining his personal ability to fund the company when no outside investors would. In Silicon Valley, the appetite for risk and having courage of one’s convictions sometimes waivers around unfamiliar technologies, hard stuff and new areas, especially if it is out of fashion.

    LEDs will undoubtedly light the future: “As about one fourth of world electricity consumption is used for lighting purposes, the LEDs contribute to saving the Earth’s resources. Materials consumption is also diminished as LEDs last up to 25,000 or more hours, compared to 1,000 for incandescent bulbs and 10,000 hours for fluorescent lights.” Now, envision one-fifth the energy consumption with Soraa’s technology.

    In the future, lighting will be cheaper and more efficient since LEDs will eliminate dangerous high voltage wiring and will not require conduits or electricians. As a result, lighting also will become more mobile and flexible: for example, as one moves a desk or dining table, it will also be easier to move the accompanying lights. As lamps produce less heat, air-conditioning bills will go down, too. Combined with networking and home sensors, new generation lighting could enable highly creative and higher efficiency applications. Consider networked buildings, new controls from your smartphone, enhanced personalization and distributed sensing, all of which Soraa is developing.Because of superior lighting sources and lower heat emission, imagine flat lights that look like a sheet of wallpaper, lighted fabrics, 3-D printed lights and the possibilities if each light has its own IP address. The innovations will enable complete design freedom.

    Lighting innovation is still in its infancy today. When Albert Einstein was awarded the Nobel Prize in 1921 for his discovery of the law of the photoelectric effect, there were still so many advancements that would stem from his work spanning from the control of atomic energy to space exploration and even applications of light.

    Today, much of the world still lives in darkness. The resource-rich lifestyle seven hundred million people enjoy–and we take for granted with the flip of a light switch–is one for which seven billion people are still striving. Entrepreneurship is likely the only necessary if not sufficient response to meet the global population’s desires for a better life and that is the promise of Silicon Valley. If we are to avoid the potentially catastrophic consequences of climate change, we need to back many more Shuji Nakamuras in even more areas of technology innovation. We must not be afraid to fail in attempting these invaluable but risky innovations. The biggest risk we can take is to not take any risk at all.



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    TechCrunch / The reinvention of medicine: Dr. Algorithm v0-v7 and beyond Tue, 23 Sep 2014 06:34:26 +0000 This post also appears on TechCrunch

    The “practice of medicine” developed through tradition and the experiential evolution of best practices with small-scale medical research studies can be substantially improved through the “science of medicine” with statistically better-validated data and conclusions. Much of the current practice is driven by conclusions derived from partial information about a patient’s history and symptoms, incomplete medical understanding based as much on opinions as validated science, interacting subjectively with known and unknown biases of the physician, hospital and healthcare system.

    Technology will reinvent healthcare. Healthcare will become more scientific, holistic and consistent; delivering better-quality care with inexpensive data-gathering techniques and devices; continual monitoring and ubiquitous information leading to personalized, precise and consistent insights. New medical discoveries will be commonplace, and the practices we follow will be validated by more rigorous scientific methods. Although medical textbooks won’t be “wrong,” the current knowledge in them will be replaced by more precise and advanced methods, techniques and understandings.

    Hundreds of thousands or even millions of data points will go into diagnosing a condition and, equally important, the continual monitoring of a therapy or prescription. Companies like Quanttus are proposing 10,000 vital sign readings per hour, not to mention Applied Proteomics, which already gets 300,000 biomarkers from a blood sample, in addition to thousands of genes, their epigenome, microbiome and more!

    During the next decade, we will see systems providing “bionic assistance” to physicians and other healthcare professionals, allowing them to perform at substantially improved levels of expertise like the very best specialists in multiple domains. Inevitably, over twenty years, the majority of physicians’ diagnostic, prescription and monitoring functions will be replaced by smart hardware, software and testing. With bionic assistance, in addition to handling more patients, a physician or nurse practitioner will operate at the level of six specialists managing six areas of care for one patient with multiple comorbidities in a more coordinated, holistic and comprehensive manner. Nurses, enabled by technology, will replace many of the functions doctors perform today. Patients will act as the CEO of their own health: they will be better informed and able to make more educated choices to select a course of therapy. Care will become cheaper, faster, more optimal, accessible and consistent across practitioners. 

    Early versions of these systems will appear underwhelming and clumsy. By comparison, my first cell phone was the size of a sewing machine and floor mounted to a car with a cumbersome handset cord but has since evolved into today’s iPhone. Similarly, in fifteen or twenty years, changes to healthcare will seem obvious, inevitable and well beyond what we envision compared to the somewhat crude digital health technologies we see today.

    The role healthcare professionals will play is hard to define, but I suspect it will change dramatically and involve the empathetic and ethical elements of medicine. A more cooperative system leveraging humans and technological systems may evolve, but the core functions necessary for complex diagnoses, treatments and monitoring will be driven by machine judgment instead of human judgment.

    As Atul Gawande notes, studies show “our attempt to acknowledge and deal with human complexity [in human ways] causes more mistakes than it prevents.” In a review of more than a hundred studies, researchers found that “in virtually all tests, statistical thinking equaled or surpassed human judgment.” The inconsistency and biases of humans, coupled with the inability to accurately consider many factors simultaneously, leads to statistical methods outperforming humans.

    According to Gawande, “the machine, oddly enough, may be holistic medicine’s best friend….As expert systems begin to take on more of the technical and cognitive work of medicine, generalist physicians will be in a position to embrace the humanistic dimension of care.”

    Already, many early versions of these systems have been developed. Alivecors’ ECG iPhone case enables cardiac patients to take hundreds of ECG’s at virtually no cost and is FDA approved to diagnose atrial fibrillation, which it can detect as efficiently as a cardiologist looking at the same tests. Continuous and convenient at-home monitoring of atrial fibrillation becomes economically feasible with this low-cost device, possibly avoiding many strokes. Similarly, Cellscope’s iPhone case imager will soon be able to diagnose a child’s ear infection and suggest a prescription. Lumiata may be able to help decide when to see a doctor and ensure they do not miss a symptom that may affect a diagnosis. monitors mental health patients and can reduce suicides, depression and bipolar episodes by working with a psychiatrists’ nurse. The app can characterize a patients’ behavior more accurately and effectively when the patient is outside of the psychiatrists’ office than a human could.

    Medical literature is rife with studies about how the practice of medicine does not meet expectations for acceptable care. Physicians often will make different diagnoses and recommend different therapies for the same patient (according to a study of the Cleveland Clinic’s second opinion line, more than 50-percent of the time!). Purported experts in their respective fields frequently disagree on the effects of basic procedures. For example, a study involving colon cancer experts showed that there was no consensus on the value of colon cancer screening. In another study, cardiologist were given the same patient information and half recommended cardiac surgery whereas the other half did not. Two years later with the same data, 40-percent of cardiologists reversed their recommendation

    Medical fact often ends up being wrong yet continues to persist. For instance, prescriptions for antipyretics such as aspirin are typically given to individuals with a fever as is the “practice of medicine”. Yet recent studies show prescribing antipyretics for fever reduction is significantly riskier than allowing the fever to run its course. Stanford researcher, Dr. John Ioannidis, has studied the phenomenon of medical research studies extensively and found that, shockingly, it’s “more likely for a research claim to be false than true”.  

    Today, misdiagnosis, conflicting diagnoses and general diagnostic error are common: ICU misdiagnoses cause as many deaths as breast cancer and adverse drug interactions cause as many deaths as automobile accidents. Preventable medical errors, often with clinical findings already in the medical record, are common. Biases frequently affect patient care: “premature closure” or coming to a diagnosis too quickly and “recency bias,” where a doctor is influenced by a recent case or article, just to name a few, are common. Conflicting recommendations are even less surprising if you consider that the average U.S. Medicare patient sees seven specialists, and the prescriptions of each specialist are seldom coordinated with the others. Today’s diagnostic error rate is the equivalent of Google’s driverless car having one accident per week; while this would be unacceptable for self-driving cars; this failure rate is permissible in healthcare. 

    The use of data science will add meaning, and over time, there will be many distinct improvements: (i) validation of what we accept in medical practice about therapies, prescriptions and procedures; (ii) more data feeding into comprehensive and holistic diagnosis and prescriptions; (iii) patient centric decision making with a better understanding and matching of choices to individual preferences; and (iv) invention of new prescriptions, therapies and procedures based on more holistic data about a patient.

    The transition will start incrementally and develop slowly in sophistication, much like an MD who starts with seven years of medical school and then spends a decade training with practitioners by watching, learning and experiencing. Expect many laughing-stock attempts by “toddler computer systems” early in their evolution. A three-year-old child makes laughable errors, but this does not imply they will make the same errors as a 21 or 40 year old. We won’t let initial toddler systems make decisions while they are developing. Their mode will be assist, learn and amplify with new generations of systems every two or three years with radical improvements over five to seven generations. To equate early “toddler digital health systems” to what may be possible is naïve. 

    Innovation will occur swiftly, more like a tsunami than a linear change, but each version  — from v0 to v7 and maybe more – will feel incremental and logical, much like how the first mobile phone that was floor mounted to a car looks nothing like iPhone today.

    The accumulation of data will accelerate these improvements. The transition to the automated science of medicine will likely occur as an organic process of trial and error, starting with initial technologies and ideas that go through multiple iterations. In 15 to 20 years, data will transform diagnostics to the point where automated systems may displace up to 80-percent of physicians’ medical work. Computers are much better than people at organizing, recalling and synthesizing complex information and keeping up with the latest research. Tasks previously thought to be very difficult such as facial recognition on Facebook can be done by systems just as well as humans. Other examples include self-driving cars, which require more complex and rapid intelligence than medical decision-making does. 

    Within a decade, we will have doctors making data based decisions using the personalized medical equivalent of a Bloomberg financial terminal for each patient. While many will opine on these possibilities, today’s doctors are not qualified to judge what surprising software technologies may emerge in the future even though they understand the “problem of patient care” better than most of us. Just because a technology does not exist today does not mean it won’t exist in the future. My optimistic view is that we are on a path to create digital health innovations that will exceed human judgment in medical competency. 

    If I am right, consumers will become the CEO of their own health because of such systems. Over time, mobile sensors, devices and apps will increase data collection and data science sophistication to offer insights to outperform the average physician, although not in every case. While many will choose this path, consumer choice should always be a priority for those who want to use traditional doctors and the current healthcare system.

    Not all doctors will change how they practice medicine, but the thought leaders will. The direction of medicine will be self-evident and advantages to patient outcomes will be well documented. Already, we see this shift with people on the fringes of medicine and a growing number are taking steps to facilitate the future. Doctors and nurses will be devoted to the human element of care, while “Dr. Algorithm” systems will assist with diagnostic and prescription work. Systems will improve by learning from the best doctors and becoming increasingly more competent. Doctors at the forefront of medicine and technology will provide better care and show markedly better treatment results; over time, the rest of the world will accept the “science of medicine”.

    Sadly, the major problems in healthcare are systemic and do not involve doctors, many of whom are accomplished, caring, honest and compassionate. In the U.S., there is a misalignment of incentives, where organizations maximize revenue at the expense of care (extra surgeries anyone? a hospital inpatient who develops an ulcer increases revenue by $40,000!).

    Further, the incredible increase in the amount and complexity of newly enabled data, vast amounts of research, longitudinal health records and medical histories are well beyond what humans can reasonably understand. Add to that the incoming deluge of 10,000 vital sign reads per hour, thousands of genomic data points and expression data, microbiome, proteomic and other data. New sensors and testing will allow for more integrative analysis. Utilizing this data will enable much better and more holistic care that will get progressively better with time.

    Because this will go against established thought and practice, I believe deep innovation will most likely come from outside the system. This often occurs with innovators acting naïvely, failing and then realizing they need more knowledge and collaboration within the system. Entrepreneurial teams often add domain expertise to their naïve “fresh piece of paper” re-invention ideas. 

    Further, the media and society broadly try to assign power to larger entities, like governmental institutions and Fortune 500 behemoths; however, radical innovation seldom comes from them. Did Walmart reinvent retail or Amazon? Did General Motors reinvent electric cars or Tesla? Did SpaceX reinvent space launches or NASA and Lockheed Martin? Most importantly, did big pharmaceutical companies reinvent biotechnology pharmaceuticals or Genentech?

    The biggest risks to slowing medical innovation are policies from government agencies, too large a belief in traditional institutions, in addition to resistance from those who may be hurt by these positive social disruptions. In the worst cases, it can substantially slow technology-driven medical innovation, which will force innovation to less developed geographies where traditional medical resources are limited.

    There will be many improbable attempts and possibilities for how data and consumer-driven systems will transform healthcare. Although many of these attempts will fail, the few that succeed will determine the future of healthcare as it is driven and transformed by digital health technologies. Improbable does not mean unimportant: we just don’t know which improbable outcome is important. Some improbable scenario today will become tomorrow’s reality.

    Biological sciences will continue to be significant, as fundamental scientific research will improve our understanding of biological systems and support complex data science systems. That said I expect innovation cycles to be much longer than those for the digital sciences, which will improve every two to three years. I do believe that digital technologies may do more for medicine in the next decade or two than all the biological sciences combined.

    Over time, we will see a 5×5 improvement across healthcare: 5x reduction in doctors’ work (shifted to data-driven systems), 5x increase in research (due to the transformation to the “science of medicine”), 5x lower error rate (particularly in diagnostics), 5x faster diagnosis (through software apps) and 5x cost reduction.

    I want to emphasize that my hypotheses and forecasts are only meant as directional guesses rather than precise predictions. These are not absolutes, but rather “truer than not” speculations. Although many disciplines will contribute to innovations in medicine like biological research or new device development, I am primarily focused on the contributions of digital health technologies to medical innovation. They are the most variable and impactful and therefore the hardest to predict in direction, timelines and scope.

    We have to imagine what might be possible: Then, we must have the courage to try and make the possibilities a reality.


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    TechCrunch Disrupt / Vinod Khosla predicts the future Wed, 10 Sep 2014 06:29:33 +0000 It’s never a dull moment when Vinod Khosla takes the stage with Michael Arrington: this year, we learn his thoughts on the forces that he thinks will shape the future, the things that make Silicon Valley culture worthwhile, and the dubious qualifications of VCs as advisors.

    Watch the full interview here


    TechCrunch – Vinod Khosla Predicts the Future


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    TechCrunch / The case for intelligent failure to invent the future Wed, 03 Sep 2014 06:23:25 +0000 This post also appears on TechCrunch. 

    The world is changing at an increasingly rapid pace. In the past, experts with spreadsheets and econometric models or social scientists with subscale studies and linear models may have been useful. These so-called experts extrapolated from what came before, but as the rate of change has increased, looking to the past often is no longer meaningful – especially in a world driven by new technology.

    In 1986, the McKinsey consulting group was asked to forecast the number of cell phones that would be in use in the United States by the year 2000; their model predicted fewer than one million, but the actual figure was more than two orders of magnitude greater at 109 million. How could one predict in 1986 what technology would look like by 2000?

    Today, the means of production and distribution are being democratized and technology’s ability to enable creative uses and business models is quickly evolving. One person can spread an idea to billions. One person can build a product used by billions. The future will not be like the past. The future will be built by those who will take risks and action to invent the world they want.

    Our civilization’s needs are expanding rapidly as seven billion people reach for the lifestyle of the 700 million most well off while our physical resources cannot keep pace.

    The only way to bridge the gap is with intellectual capital, which will multiply the resources available to us. When five-to-seven billion people all demand equal energy consumption per capita, natural resources per capita (lumber, copper, steel, etc.), medical, health and educational resources and resource-intensive foods (meat, poultry, sugars, etc.); the way out is not linear scaling but rather resource multiplication through innovative technology.

    Already, Wikipedia is the most powerful medical tool we have globally today; Google the most powerful learning tool; Facebook and Twitter the most powerful social tools. It is an absolute necessity that we develop intellectual property that multiplies our resources if we are to bridge this gap. We must invent our way into a new future. There is many an entrepreneur toiling away in anonymity, working on things few others know is important, but some of them will change the world.

    Over the years, I have developed great skepticism toward so-called experts and pontificators who seem authoritative in forecasting and create an illusion of knowing based on very little actual expertise. For instance, a University of California study conducted over the course of twenty years polled 284 eminent experts – ranging from politicians to professors and correspondents to consultants – all with widely differing opinions from Marxists to free-marketers. The so-called “experts” made 28,000 predictions about the future, but researchers found they were only slightly more accurate than chance and worse than basic computer algorithms. Most planning and reliance on traditional methods and processes lead to similar errors all while giving people false confidence, especially as the rate of change accelerates. Academics, especially in the social sciences, don’t do much better.

    On the other hand, I have experienced the power of doers, the chaotic and naïve world of optimistic entrepreneurs who just try things, admit mistakes, fail, learn, iterate, try again and find solutions – often out of necessity.

    Accepting, even encouraging, the right kind of failure is the best way to discover the solution to our problems and close the resource gap. Learning by engaging, iterating and persisting, rather than pursuing academic studies or writing papers, seem to be the major drivers of change (although I also am a fan of scholarship to expand human knowledge that in some cases entrepreneurs may apply or leverage).

    In bridging the gap between the resources we have and the resources and progress we want, the biggest risk we can take is to not take any risks at all. Taking risks means accepting failure and also recognizing that not all failure is good. Failure because of intelligent but risky attempts may be the only way we bridge this gap. As Robert F. Kennedy so aptly put it, “Only those who dare to fail greatly can ever achieve greatly.”

    Many smart people have taken big risks and made intelligent attempts at audacious goals but still failed. Sometimes the failure is because they pursued the wrong vision. Sometimes the vision is right but the tactics are wrong. Often, the failure can be simply attributed to just plain bad luck.

    There are a dozen reasons a good venture can fail. In my decades of encouraging entrepreneurs and innovation, I have learned that an entrepreneur probably only controls approximately 30 to 40-percent of the factors that affect their success. Competitors and environmental circumstances often make up the rest. This doesn’t mean we shouldn’t try, because if we didn’t then the world would approach stasis.

    If we take the very small percentage of entrepreneurs who succeed (keeping in mind that early in their careers, it’s hard to differentiate the successful entrepreneurs from the failures) and look at the impact they have made and the resources they have helped multiply, the failures seem trivial by comparison.

    A 90-percent probability of failure means a 10-percent chance of changing the world, if the goal is ambitious enough. We may have lost resources in those failed efforts, and naive journalists may have poked fun at them, but without the attempts, we would not eventually have developed the many innovations that revolutionize how we live today – including the personal computer, email, the Internet, the mobile phone, the tablet or any of the endless applications built on these technologies.

    We would not have Google, Twitter, Amazon, Uber or countless others. Although a hundred entrepreneurs may fail for each one that succeeds, the successes make the failures worthwhile.

    Too often, there is a tendency, especially among investors, large corporations, and public officials, to reduce the probability of failure to the point that the consequences of success become inconsequential.

    In the area of sustainable energy, only cost effective and clean solutions matter, and those are likely to come from entrepreneurs attempting Black Swan technologies or approaches that few believe are possible. Already, Tesla has changed the automaker’s view of electric cars, and Google’s driverless car effort has gotten others moving on self-driving cars.

    In the areas of agriculture and food, we are seeing early attempts at unconventional approaches and innovation to upend the current resource inefficient system. In education, the old guard laughs at early failures in online learning and massive open online courses (MOOCs) considering them naive, but entrepreneurs are now trying the next iteration after learning from their mistakes (even though many academic pontificators dismiss this education style entirely).

    Beyond the litany of information technology pioneers, the efforts of innovators in other fields have been equally impressive in forcing change in their respective fields. Entrepreneurs at Genentech in the 1980s revolutionized pharmaceutical drug discovery. Horizontal drilling caused a big, but questionable, shift in energy production, which affected natural gas prices and home heating bills.

    Entrepreneurship itself is not a complete solution as social and political factors often play a part, but it is still the single most important resource multiplier we have. In fact, entrepreneurship, especially technology-based entrepreneurship, may be the only necessary, if not sufficient, response to meet the global population’s desires for a better life and to give seven billion people the resource rich lifestyle that approximately seven hundred million of us currently enjoy.

    George Bernard Shaw famously said, “The reasonable man adapts himself to the world: the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.”

    It is encouraging to see entrepreneurs fighting to overcome the naysayers who pervade our world. It is energizing to feel the passion that entrepreneurs with a dream bring to their industry. Skeptics and cynics never did the impossible, and we need the impossible to bridge our resource gap. Please don’t call a committee hearing or start a research study to follow up on this idea. Just go do it.

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    Fireside chat with Google co-founders, Larry Page and Sergey Brin Thu, 03 Jul 2014 22:16:21 +0000 At the annual KV CEO Summit, we were fortunate to have both Larry Page and Sergey Brin sit down to discuss a wide range of topics including the acquisition that never was (although not for lack of trying!), why computers today are still pretty bad, their partnership over the last 16 years, the future of Google, government 2.0 and how machine learning and technology will shape our future of abundance.

    The full transcript is included below.



    Fireside chat with Google co-founders, Larry Page and Sergey Brin

    Vinod (VK) I hate it when people say somebody needs no introduction, then goes on to introduce them, but I do want to start in the realm of what might have been. A few years ago – I think 1997 – Larry and Sergey almost got acquired. Can you tell us a little bit about this? I always wonder how the world might be different if that had, in fact, happened.

    Sergey (SB) Well, we had developed this technology we called PageRank – sadly, not BrinRank. But anyway, it probably would’ve sold better that way. But we had developed this technology that we found was useful for search. By itself, it wasn’t really a complete search engine. What we had just searched titles of webpages and ranked them quite well. But we showed it to a bunch of the existing search companies back then. Some of you might remember them – Infoseek, Excite, Lycos. And probably, the greatest interest came from Excite, and actually came from you, Vinod. You were the investor in Excite. We spent a while talking to them, and talking to you, Vinod. You remember that. In the end, I don’t think the management team there was quite as excited about it – no pun intended. But I remember, there were four of us at the time – four grad students at Stanford. I remember, we fired off this note to Vinod. It was just a little e-mail that said, “We really don’t want to sell, but for $1.6 million, you got a deal.” And a few minutes later, we got a reply that said, “That’s a lot of dough, but ok we’ll do it.” That’s characteristic Vinod there. So then, ten minutes later, Scott – one of the four of us – comes running in, laughing. Huge grin on his face. He had faked the reply and back then, the ethics around faking emails weren’t quite the same. Anyway, so he had that big joke. The deal obviously never came to fruition, and we went our own way to build search.

    VK So the way I remember it, we actually agreed on a deal around $350,000.

    Larry (LP) What? That’s typical of Vinod.

    SB Are you trying to renegotiate this now? $350,000.

    VK But I had a hard time getting the management team to agree that they should acquire Google.

    LP I think he’s saying that they were having a hard time going to 1.6 billion, and we were having a hard time changing our number.

    VK They felt that they didn’t need it. But I start here for one very simple reason. There are many, many instances where things could have gone either way. I’m really glad they didn’t acquire, because the world might have been a very, very different place. Looking back in retrospect, I feel like it would have been really, really sad if, in fact, Larry and Sergey had sold the company and not pursued the vision and changed the world the way they have. 

    LP It’s actually an interesting story, because the reason we didn’t sell it is not so much the money. I don’t know, really. We were grad students eating burritos or whatever, so $1 million was a fair amount. The reason I think we really didn’t sell the company was that we talked to all the search companies at the time, and they just weren’t interested in what we were doing. It was obvious they didn’t want to buy this company that didn’t really have anything without the people. So they wanted us, but we were like, “Why are we going to work with this place that doesn’t believe in search?” That’s not going to cause anything good to happen. So ultimately, we didn’t sell for that reason. It was just that they weren’t interested in it, which is the same reason they had trouble getting to $1 million. Which I guess, at the time, was a lot of money. But I think ultimately, for me– search seemed pretty important. It was about actually wanting to do something in that area, and it didn’t seem like that was going to happen in these organizations.

    VK It’s amazing when the business people take over, they get focused on short-term revenue and lose the long-term vision. That’s a good place to kick off on a different point. Most companies end up in failure, and I’m not talking about just the start-ups. But if you look at the S&P 500, so many of the very large companies keep going out of business at an increasing rate. People are surprised. What do companies need to do – whether they’re small or large – to address these challenges? How do they take a different path, and how is Google taking a different path?

    LP When I talk to most companies, I do think their leaders are pretty short-term focused. Imagine you’re running Exxon, what do you do? Say you want to do something good with the most valuable company on earth. A lot of people think probably, it’s not doing good things – worried about the environment and so on. But if the company has a lot of capabilities–worldwide operations and manufacturing, government relations, probably could do a lot different things, if you took a 20-year view. If you took a four-year view, that’s a pretty hard question to answer. What are you doing in the next four years, which I think is about the average tenure of a Fortune 500 CEO. So if you’re being measured quarterly– obviously, it’s good to have some pressure so you actually do things, make money and improve things. But I think the four-year horizon for leaders is pretty difficult. It’s pretty difficult to solve big problems in four years. I think it’s probably pretty easy to do it in 20 years. I think our whole system is setup in a way that makes it difficult for leaders of really big companies. Eventually, what you’re doing doesn’t makes sense over time, for whatever reasons – environmental or social or whatever it is. I think companies have a big problem making a big transition, so leaders get replaced.

    VK I’d love both of you to comment a little bit on where Google is. What are the couple of things that become really, really critical for Google to do in the next five to 15 years? What areas are going to be critical?

    SB I think if there was a couple of areas that were critical, then that would be too vulnerable a spot to be in, in a way. There are many, many opportunities to broadly use technology to impact the world, and to have a successful business. We try to invest, at least, in the places where we see a good fit to our company. But that could be many, many bets, and only a few of them need to pay off. From my perspective – running Google X – that’s my job, is to invest in a number of opportunities, each one of which may be a big bet. But I hope– well, you have a portfolio too. But I hope, across that portfolio, some of them pay off. Some of them are connected to our existing business and some, not so much. If you look at the self-driving cars, for example, I hope that that could really transform transportation around the world, and reduce the need for individual car ownership, the need for parking, road congestion and so forth. If that was successful in its own right, we would be super happy. It’s obviously still a big bet. It’s got many technical and policy risks. But if you are willing to make a number of bets like that, you’ve got to hope that some of them will pay off.

    VK Larry, any particular areas you think are critical to Google’s success the next few years? Areas you don’t want to screw up?

    LP I think we’re pretty excited about Android obviously. I think that we have our traditional businesses obviously, search and things like that. I think one of the things people have been confused about– people are like, “What is Google? Why are you guys coherent?” And it’s really interesting when you look at search. It’s really trying to understand everything in the world and make sense of it, organize it for people. We said, “Well, We’re doing that. A lot of queries are actually about places, so we need to understand places.” Then we said, “A lot of the queries are about content we can’t find. We did books, and so on.” So, we’ve been gradually expanding that. If you look at things like Google Now also– well, maybe you don’t want to ask a question. Maybe you want to just have it answered for you before you ask it. That would be better. Originally, the “I’m feeling lucky” button, that was supposed to be– you should be able to skip the search results, and go directly to the answer. Unfortunately, it didn’t work that well. It was kind of an obtuse naming of the feature, but that was the same kind of idea. We feel like right now, computers are still pretty bad. You’re just messing around. You’re scrolling on your touchscreen phone, and trying to find stuff. You’re in a car. It’s bouncy, and you can’t– it doesn’t really work. I think the actual amount of knowledge you get out of your computer versus the amount of time you spend with it is still pretty bad. So I think our job is to solve that, and most of the things we’re doing make sense in that context.

    VK Along those lines, one of the areas I know you’ve both been very interested in is machine learning and AI, as it’s been called in the past. In the past, it’s never quite reached its potential or speculated potential. How far do you think it is as a technology, and how much of a role do you think it plays going forward?

    SB Look, this is our latest model, right here [gestures at Larry]. See, not perfect yet. But doing pretty well. In the machine learning realm, we have several kinds of efforts going on. There’s, for example, the brain project, which is really machine learning focused. It takes input, such as vision. In fact, we’ve been using it for the self-driving cars. It’s been helpful there. It’s been helpful for a number of Google services. And then, there’s more general intelligence, like the DeepMind acquisition that – in theory – we hope will one day be fully reasoning AI. Obviously, computer scientists have been promising that for decades and not at all delivered. So I think it would be foolish of us to make prognoses about that. But we do have lots of proof points that one can create intelligent things in the world because– all of us around. Therefore, you should presume that someday, we will be able to make machines that can reason, think and do things better than we can.

    VK In this group, there are a bunch of people who are addressing the beginnings of the machine-learning revolution. There are people replacing farm workers, so you can weed plants and provide plant-by-plant care. People who are doing machines to make hamburgers automatically, all the way up the chain to people who are replacing law clerks or even doctors, psychiatrists, ENT specialists, you name it. So the whole span, from very simple work to very large work, is being replaced in a way that is a little bit scary. I want to come back before we finish to the social aspects of some of the technology changes. But I do wonder if the vast majority of jobs that we know today, more than 50-percent might be replaced by machines that can do that human judgment piece better.

    SB We’ve been working on the venture investment machine learning. No, I’m just kidding. It’s kind of true actually.

    VK As long as I can buy one, I’m good.

    LP That is what Google Ventures does though.

    SB They did. They started that way. I don’t know if they’re actually doing that. I don’t know. They keep hiring partners for whatever reason, so I don’t know. It might not be working so well, the algorithm venture.

    VK In fact, one of the early Excite employees, Graham Spencer, was working on this project at Google Now.

    SB Maybe they just sit around and have parties. Maybe they are using the algorithm. I don’t know what goes on in Google Ventures. But I do think that a lot of the things that people do have been – over the past century – replaced by machines and will continue to be.

    LP 90-percent of people used to be farmers. So it’s happened before. It’s not surprising.

    VK The vast majority of employment shifted from farming to only needing about 2-percent of the U.S. workforce. That happened between 1900 and the year 2000. I see the beginnings of that happening again with the rapid acceleration the next 10, 15, 20 years.

    LP I totally believe we should be living in a time of abundance, like Peter Diamandis’ book. If you really think about the things that you need to make yourself happy – housing, security, opportunities for your kids – anthropologists have been identifying these things. It’s not that hard for us to provide those things. The amount of resources we need to do that, the amount of work that actually needs to go into that is pretty small. I’m guessing less than 1-percent at the moment. So the idea that everyone needs to work frantically to meet people’s needs is just not true. I do think there’s a problem that we don’t recognize that. I think there’s also a social problem that a lot of people aren’t happy if they don’t have anything to do. So we need to give people things to do. We need to feel like you’re needed, wanted and have something productive to do. But I think the mix with that and the industries we actually need and so on are– there’s not a good correspondence. That’s why we’re busy destroying the environment and other things, maybe we don’t need to be doing. So I’m pretty worried. Until we figure that out, we’re not going to have a good outcome. One thing, I was talking to Richard Branson about this. They don’t have enough jobs in the UK. He’s been trying to get people to hire two part-time people instead of one full-time. So at least, the young people can have a half-time job rather than no job. And it’s a slightly greater cost for employers. I was thinking, the extension of that is you have global unemployment or widespread unemployment. You just reduce work time. Everyone I’ve asked– I’ve asked a lot of people about this. Maybe not you guys. But most people, if I ask them, ‘Would you like an extra week of vacation?’ They raise their hands, 100-percent of the people. ‘Two weeks vacation, or a four-day work week?’ Everyone will raise their hand. Most people like working, but they’d also like to have more time with their family or to pursue their own interests. So that would be one way to deal with the problem, is if you had a coordinated way to just reduce the workweek. And then, if you add slightly less employment, you can adjust and people will still have jobs.

    SB I will quibble a little bit. I don’t think that in the near term, the need for labor is going away. It gets shifted from one place to another, but people always want more stuff or more entertainment or more creativity or more something.

    LP I think it’s an imperfect system, so there’s no reason that it really will correspond. There’s been some economics arguments that, that’s not as true now as it has been. But that could lead to other kinds of governance problems and so on. But nobody really knows the answer to that question.

    VK Since we went in to the social domain, there’s short-term issues like you see in San Francisco. People not appreciating that people who are part of the ideas economy in some way are doing much better than people who aren’t.

    LP This kind of thing is a really a governance problem, because we’re building lots of jobs, lots of office buildings, and no housing. So it’s not surprising that caused a lot of issues. You also have a lot of people who are rent controlled, so they don’t participate in the economic increase in housing prices. It actually hurts them. It doesn’t help them. So I think those problems are more structural and very serious problems. We’re not really on a path to fix those problems in this area.

    VK But they may be indicators that income distribution will get more lop-sided over time.

    LP That’s true. That’s also a big issue.

    VK I fundamentally believe we move from an economy of labor and capital to an economy of ideas. Most economists haven’t caught on to this change, that ideas are a disproportionately large part of the growth of the economy, which I won’t go too deep there, but it leads to some interesting questions. The Republican/Democratic divide about taxes and income redistribution may become much more critical and much more intense. I don’t know if you have any thoughts on that. That seems to be– we don’t have to go there if you—

    SB I think ideally, one would try to tax more of the things that we don’t want, and either subsidize or encourage the things that we do want. The kinds of things people spend money on that are wasteful, you can imagine having higher taxes on. Or things that are harmful, like carbon, could be taxed at a higher rate. On the one hand, presumably it will slow wasteful spending. But on the other hand, perhaps we could encourage the kinds of investments that we want to be making.

    VK Looking 40 years out, I find it hard to imagine why we won’t need to support half the population to not work but pursue other interests that are interesting to them. Suddenly, X-games is an entertainment event instead of a sport. Anyway, let me go back to Google. We talked a little bit about self-driving cars. How large a change do you think that can cause to happen in society? Either one of you speculate on how large a change that might mean. It’s more than just software.

    SB I hope it can be a really dramatic change. Off the bat, of course, there are the many people who currently cannot get around if they’re too old, too young, disabled and so forth. But that’s still just a fraction of the population. I think the bigger changes can come to the community, the lifestyle, the land use. So much of our land in most cities, about 30 to 50-percent is parking, which is a tremendous waste. Also, the roads themselves, which are both congested and take a lot of space are just unpleasant. So with self-driving cars, you don’t really need much in the way of parking, because you don’t need one car per person. They just come and get you when you need them. You can also make much more efficient road use, if you– and this is not something we’ve developed yet, but it’s certainly been simulated by many. They can form trains. They can go at high speed, perhaps much higher than our highway speeds here. Fundamentally, they can just make much more efficient use of the space and therefore, people’s time. So I think that can be really transformative.

    VK Real quickly. I love the car, because it’s such a radical transformation economically. The way I look at it, it costs $300 a month to lease a car or hiring a driver is $300 a day. A driverless car is a 97-percent cost reduction in the cost of a driven car, making it cheaper than a car you own probably. So it completely changes economics. But the traditional auto companies aren’t going to want a large reduction in the number of cars.

    LP Depends if they have a five-year view or a 20-year view.

    SB It also depends if they’re the ones producing them. Any individual company might be happy as long as they’re the ones making those cars.

    VK Do you think Google gets into the business of making cars potentially? Not that I’m asking you to announce what you’re doing, but speculate 10 years from now.

    SB Well, I’m very excited about the technology that we’re building, but it’s still in its early stages. I think eventually, in the future, there might be multiple partners or companies that we work with that– some of them can be manufacturers and some might be service providers. This is all pretty speculative. Right now, we’re working hard to just get the basics so the technology working. But the ideal self-driven car is not one that’s– we’ve experimented, where we convert the Lexuses and the Priuses. But it’s also really nice to not have a steering wheel, not have pedals; maybe the seats should face each other, things like that. I’m not sure that the traditional car designs are ideal for self-driving.

    VK Let me go back to Larry. As CEO of Google, a lot of these guys have board members who keep saying, Focus on a few things. Self-driving cars is one. You’ve done some things in health and others. How do you decide what’s focused and what’s unfocused?

    LP I’ve been thinking about this change quite a bit over the years. I think it sounds stupid if you have this big company, and you can only do five things. I think it’s also not very good for the employees. Because then, you have 30,000 employees and they’re all doing the same thing, which isn’t very exciting for them. So I think, ideally, the company would scale the number of things it does with the number of people in a linear fashion. As far as I can tell, that never happens. It’s logarithmic with the number of people, if that. I would always have this debate actually, with Steve Jobs. He’d be like, ‘You guys are doing too much stuff.’ And I’d be like, ‘Yeah that’s true.’ And he was right, in some sense. But I think the answer to that – which I only came to recently, as we were talking about this stuff – is that if you’re doing things that are highly interrelated, then there is some complexity limits. It’s all going to escalate to the CEO, because you have things that are interrelated. At some point, they have to get integrated. A lot of our Internet stuff is like that. The user experience needs to make sense. It needs to feel like you’re using Google, not that you’re using something else. So I think there is a limit on how much we can do there, and we have to think carefully about it. Everything about the automated cars is like– Sergey can do that, and I don’t have to talk to him. I like talking to him. But I don’t really have to talk to him about that, because there’s almost zero impact on the rest of our business. Although it does use some great engineers who we have on mapping and other things. Naturally, they move to that project, but that’s a scalable process. I don’t have to talk to those engineers. They just move magically. So I do think companies usually try to do very adjacent things. They figure, “We’re going to know exactly how to do something that’s very similar to what we already do.” The problem with that is that causes a management burden. Whereas, if you did something a little less related, you can actually handle more things.

    SB For Google X, I created a set of rules for our projects that, by design, keep us farther away from Google. For example, we focus on atoms not bits. What we do involves a lot of software, but it always has a key non-software component, like obviously, the cars, even though they have a lot of software.

    LP Balloons.

    SB The balloons. The Internet project, Balloon. We have Internet via high altitude balloons. We have the kite-based power, the flying wind turbines. All these things are pretty physical and that’s by design. In fact, when I focused on Google X, I shifted out a few projects, which seemed closer to Google’s core.

    LP I was just going to say, for startups, maybe. You need to get one thing done well, or else you don’t have permission to do anything else. But for big companies, I think it’s a little different.

    VK That leads to another strategy question. Can you imagine, given your interests– you’ve had some interest in health. There’s some radical stuff there. Android is a natural platform for health. Mobile is, and health needs to be distributed and highly accessible – broadly, not just at the hospital. Can you imagine Google becoming a health company? Maybe a larger business than the search business or the media business?

    SB I think it’s, for sure, a larger business. In fact, Google X – for example – we do have the glucose reading contact lenses. 

    LP Which are very cool.

    SB I don’t wear them. Well, I don’t wear contacts, so I don’t have the need to measure my glucose. But they should be coming along pretty well. I’m very excited about that. Generally, health is just so heavily regulated. It’s just a painful business to be in. It’s just not necessarily how I want to spend my time. Even though we do have some health projects, and we’ll be doing that to a certain extent. But I think the regulatory burden in the U.S. is so high that think it would dissuade a lot of entrepreneurs.

    LP We have Calico, obviously, we did that with Art Levinson, which is pretty independent effort. Focuses on health and longevity. I’m really excited about that. I am really excited about the possibility of data also, to improve health. But that’s– I think what Sergey’s saying, it’s so heavily regulated. It’s a difficult area. I can give you an example. Imagine you had the ability to search people’s medical records in the U.S.. Any medical researcher can do it. Maybe they have the names removed. Maybe when the medical researcher searches your data, you get to see which researcher searched it and why. I imagine that would save 10,000 lives in the first year. Just that. That’s almost impossible to do because of HIPPA. I do worry that we regulate ourselves out of some really great possibilities that are certainly on the data-mining end.

    VK Two or three years ago, I wrote a blog called, “Do We Need Doctors?” And I speculated Doctor Algorithm will do most of the work. Amol (the CEO) from is here. They introduced their psychiatric monitoring app at Kaiser—

    LP I was talking to them about that last night. It was cool.

    VK In the first week, Kaiser believes they saved three suicides, because the app alerted the nurse that the patient was in a suicidal state. That’s just the big outcome. But that feels like a software business, mostly. Delivered mostly through mobile, and it’s more needed in the least regulated areas – India, Africa, places like that. Go ahead.

    LP I was going to say, in the U.S., I think diabetes and heart disease are both about 3 or $400 billion dollars a year in expense. That’s of the 1.3 trillion, so that’s a pretty big chunk. So definitely, just making a dent in those would be a big deal for people.

    VK In fact, most people may not know this, but the first mobile app got approved as a pharmaceutical because it’s directly competitive with metformin, which is the principle drug for blood sugar reduction. So it has the same effect, and the FDA approved it. Of course, with the funny caveat that it has to be refilled every three months, and it’s priced at $182 a month.

    LP Do you want to take any questions from the audience?

    VK I’m going to have one question for you, Larry. You lost your voice last year. You’ve talked a little bit about what you’ve learned from that.

    LP Sergey encouraged me to make all the details public. That was really great, to get a lot of feedback, information, things like that. As a good example, we’re talking about medicine, a lot of the angst people have about their medical records is related to insurance. Which if we could just fix insurance– the point of insurance is to cover medical issues. We somehow worked ourselves into a state around that. Obviously, I don’t care very much about that, so I don’t have that issue. Anyway, I don’t think my voice is likely to get much worse, so I’m happy about that. I can get my job done fine.

    VK Why don’t we open it up to a few questions from the audience?

    Audience Member 1 Hi. I’m Vivek. Co-founders are super important for building a company, and you guys are doing great for 15 years. Have you fundamentally disagreed on something at all over the last 15 years, and how do you resolve?

    SB Where do I start?

    LP No.

    SB What’s he talking about? We disagree all the time.

    LP Not fundamentally.

    SB No, no. We really disagree.

    VK They’re fundamentally disagreeing on whether they disagree.

    SB I think if you get to know somebody over a long period of time– we’re working together for so long, and we are committed to doing that. You don’t get agitated about one little thing or another. We work through it. Also, generally, we’ve gotten to think remarkably alike, which scares some people around us.

    LP The other thing, we know enough that when we’re disagreeing– you make a lot of calls that aren’t obvious. So if you’re disagreeing, it’s probably that it’s not obvious what to do.

    SB Let’s see. Whoever has the mic, ask the question. Eric? Yeah.

    Audience Member 2 So back to the original question of the alternative universe where you sold to Excite. You were grad students. You could imagine that, that happened, right? Maybe it was $10 million. Maybe it was $100 million. There’s some price that might have made that happen. What do you think you would’ve done next after working at Excite for a couple of years?

    LP I think we would’ve been very happy. We’d have a nice house—

    SB I don’t know. Do you remember the Founder’s Dungeon?

    LP No.

    SB When we toured Excite, this was one of the things about it. They toured us around. It was actually– I think it was Terabella or something. It’s one of the buildings we now occupy. Here’s these offices, so we go downstairs, and they locked away this one founder. I don’t remember which one it was. He’s in a little closet downstairs. He goes, “I’m so happy down here.” He’s just in this little janitor’s closet. It was a little dungeon. I don’t know. It’s hard to say. I don’t know how long I would’ve stayed, to be honest. I don’t know if it would’ve been a good acquisition for them, to be honest. I don’t know that we would’ve been so passionate or productive or what not.

    LP I think that’s true.

    Audience Member 3 You mentioned the limitations of four-year outlook verses a 20-year outlook. I’m wondering your thoughts on governments and their limitations in having these limited terms. What would be government 2.0 in your mind? 

    LP That’s a really big topic, which I don’t know very much about. But I do worry that when I look at the government– our interactions with governments around things we get interested in – spectrum or whatever – that it becomes pretty illogical. The reasons aren’t that the people aren’t good, and they’re trying to do good things. Most people you talk to in government are there for the right reasons. They’re not there for the pay typically. They’re there because they want to make the world better. But I think the set of rules that we have– one thing that I would observe is that the complexity of government increases over time. So, just looking at all our democracies around the world, n modern regulation and in law, we have increases without bounds. I was trying to reduce the complexity in Google. I was thinking, “We’re getting to be a bigger company. Let’s take our rules and regulations. Let’s make sure they stay at 50 pages, so people can actually read it.” But the problem that I discovered about that was that by reference, we include the entire law and regulation of the entire world, because we’re a multinational company. We operate everywhere. Our employees, what they do affects everything. In some sense, we’d have to read the hundred million pages of law and regulation that are out there. It’s probably something like that. I don’t know how much it is, but it’s very big and getting bigger. One thing I propose is that– I was talking to some government leaders. I said—actually to the President of South Korea. It was great. I said, “Hey, why don’t you just limit your laws and regulations to some set of pages? And when you add a page, you have to take one away.” She actually wrote this down. She’s great.

    SB Is that one of the pages now?

    LP No, it’s only one sentence. But I do think that– otherwise, I think the government’s likely to collapse under its own weight, despite people being good and well-meaning, just because of that one issue of complexity increasing. I just don’t think it’s reasonable. When we went public, laws were from 60 years ago. If you took a random law professor, locked them in a room, told them to rewrite those rules, you’d have something much better come out. But we’re not doing that.

    VK Larry, we—

    SB How do you know that? You don’t know about the dungeons, filled with law professors. That’s the other Google X project I have.

    LP I’m glad to hear that.

    VK We’ve got to finish up. But there’s one question I want you to just to grasp, because a lot of founders deal with this. You started off as CEO, got Eric as CEO for a while, took back over. Can you just speak to how the experience was retrospectively? Was it the good way to do it? A bad way to do it? How would you have done it different, or would you do it the same? It’s something everybody here struggles with– or a lot of people struggle with.

    LP I think it turned out pretty well, so that’s really good. Eric’s a great leader, and I think we learned a tremendous amount from him. I think we ran pretty effectively also as a team for a long time on those things. I think these are very personal decisions, and there’s probably no right answer. If you have a really long time period, obviously, you can probably learn the things you need to know about management or not. Like I said, it’s a personal decision. I think running a company – a start-up – is a really big commitment. It takes a lot out of you, out of your life to do well, I think. I’m sure the same is true for companies as they get bigger. So I’m not sure that’s for everyone. Some people are good at starting things, not good at finishing things. And I think organizations have trouble recognizing that, too, and those are difficult transitions for people. In general, if you have a project or company and it can have stable leadership over 20 years, that’s better than not.

    VK Well, thank you. It’s been a treat to have both of you here. Really appreciate the time to have you two drive here. In Sergey’s case, to kite-board here. He didn’t quite make it.

    SB I only made it halfway, which is the worst distance to actually make it. But I turned around and went back. There wasn’t wind on the side of the bridge.

    VK Well, thank you.

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    UX recruiting toolkit: Understanding UX Skills (1/7) Tue, 01 Jul 2014 22:00:05 +0000 User experience design is a multidisciplinary field. A well-designed product must be visually appealing and simple, and easy to understand, learn and use. Creating a well-designed product is an endeavor that requires technical skills — an understanding of computer science, human computer interaction and visual perception and cognition — and tremendous creativity. User experience requires analytical thinking directed toward a great user experience, and that user experience has to be grounded in a deep understanding of what people need, how they think and why they behave the way they do.

    The first draft or sketch is rarely the “right” or “best” design. Creating a well-designed product requires exploring a range of solutions, identifying promising directions and then refining those directions through iterative cycles of design, prototype and test. To that end, there are many different skills required to design well. Here is a guide to the different skills needed to support a robust design process, and the job titles that correspond to those skills.


    User Research

    You can’t design effectively for people unless you understand them: how they behave, how they think and what motivates them. Cognitive psychologists and anthropologists often have the best training for a variety of research methods for studying people, including ethnographic field studies, survey design and usability tests. Note that usability studies and field studies are not the same as focus groups, which are often designed and facilitated by marketing professionals. In contrast to focus groups, which are often used to gauge market interest and involve explicitly asking people for their reactions, user research is about observing human behavior. What people say they will do and what they end up actually doing are not always the same. Insights from user research help us understand why people act the way they do, and when complemented with data analytics, can tell a more complete story about user behavior.

    Generally, there are two types of qualitative user research: formative research and summative research. Formative research happens upfront, before a product or feature set is built. The intention behind formative user research is to understand latent user needs, behaviors and motivations. That understanding of user needs is what inspires product definition, feature prioritization and product design.

    After an initial design or several design explorations are created, summative user research helps the team gather feedback from users to see how easy the product is to use, how well they understand the offering and whether it not only meets their needs but also delights them. The feedback gathered from this phase of research helps the team go back and iterate on the design.

    Good researchers understand what methods to apply to help get insights into different kinds of questions. They know how to use qualitative data to help explain the “why” behind what we observe through quantitative data like logs analysis. They understand what the strategic objectives of the team are and design a research program to help the team meet those objectives. They use sound judgment when drawing conclusions about users, even though the sample size is usually small. They can identify outliers and help provide context to the team to better understand overall needs and behaviors. They are capable of facilitating brainstorming sessions with the team and use insights about users to inspire technically feasible solutions.

    When startups have invested in hiring a user researcher to join the team, the researcher usually becomes an incredibly valuable member of the team, helping to drive design decisions, feature priorities and overall product vision. User researchers can help the entire team feel empathy for the customer or end-user.

    People who contribute to design in this capacity often have a graduate degree in cognitive psychology, anthropology or human-computer interaction. Common job titles include user researcher, usability analyst, usability engineer or user experience researcher. 


    Interaction Design and Product Design

    Design is not just about how a product looks but also how it works. A well designed product or service considers all the touchpoints a user has with the offering, from acquisition and conversion, to moving people through the experience and making people feel good about the interaction. At the highest level, this type of design is the manifestation of the company’s core values, mission and principles in the form of the actual product or service offering. People who solve problems at this level may be referred to as product designers. Product designers help define what product is being built and, equally importantly, what is not being built. Tactically, deliverables may include wireframes, prototypes, functional specifications and flowcharts; people who focus at this level often have interaction designer as the job title.

    Good product and interaction designers know how to engage in a design process that leads to good outcomes. They are good communicators; they are knowledgeable about user interface standards and conventions, and are capable of envisioning the dynamic nature of the product and the functional flow. They know when and how to use user research. They know how to adopt the right mindset at the right stage of the design and development process: divergent thinking during brainstorming and ideation phase, and convergent thinking when it’s time to iterate and launch. They are deep thinkers: they understand interdependencies, requirements, and constraints, and take a step back, see the big picture, and clarify how everything fits together. They have high emotional intelligence: they know how to work with engineers and marketing stakeholders and how to receive feedback well. Product and service design are inevitably the outcome of a large team effort and a reflection of the company’s culture, values, and principles; a good designer knows how to guide a company and/or team through a journey of defining or understanding the vision, values, and principles, articulating that, and making it tangible.

    Educational backgrounds may vary tremendously, and may include but are not limited to computer science, human-computer interaction, human factors, and library science and information architecture. UX is a very multidisciplinary field and relatively new, so don’t rule out people who come from adjacent fields like industrial design and architecture; spatial design is very complementary to interaction and product design. 


    Visual Design

    Creating an overall aesthetic for the product or service offering is driven by someone with a visual design background. They own the color palette, grid, typography, layout, icon style, and visual and branding assets in the user interface; they create the visual expression of the brand as the company wants to see themselves.

    Good visual designers can be trusted to be the final arbiter of good taste. They understand how people see and process information and use that understanding to create designs that are easy to comprehend and are comfortable to “live” in. They understand that visual adornment is meant to support the experience, and not be the experience. Hence, they avoid creating products that are “overdesigned”, where the product is so decorated that the user cannot fully enjoy the experience. Great visual designers have a regular practice of creating and exploring different design directions for every design decision. They sweat over the details; no detail is too small to mind.

    Many people trained in graphic design often apply for visual designer roles. When screening candidates for such a role, the designer must understand what it means to design for interactive use. It is not enough to hire someone for a visual designer role whose experience is limited to creating print design, brand identities, icons, banner ads, or posters because an interactive product is not a set of static screens. Your visual designer must be capable of envisioning the dynamic, user-driven nature of the product.


    Prototyper / Web Developer / Front End Developer

    The process of design requires prototyping in order to have something to test and iterate. People with strong front end development skills bring design ideas to life for interactive products, while preserving the integrity of the design by paying close attention to design details during implementation. Such people may come from job titles that include Web Developer, Front End Developer, or Prototyper, but they are all different in nuanced ways.

    People with any of these three job titles may be equipped with the skills to build prototypes of designs and implement the front end. People who make strong prototypers or consider themselves prototypers are often used to writing throwaway code, and have developed strategies for quickly bringing an idea to life. They are optimizing for development speed and iteration. Web developers and front end developers are more focused on writing production code that is durable, cross-platform and cross-browser compatible, with graceful degradation or responsive to various screen sizes and devices. Good front end developers sweat over getting the implementation details of the front end just right, inasmuch as good designers sweat over getting the details of the interaction and visual design just right.

    Many prototypers and web developers are self-taught. They may have strong design sensibilities and straddle the role of designer and front end engineer. Front end engineers may also be self taught, and more often have degrees in computer science.


    UX Skills FAQ

    Q: I don’t have the resources to hire four different people. Should I hire a jack of all trades or specialists?

    A: If you are lucky enough to find a really great candidate who has all the skills described above, creates excellent work, and is willing to do that range of work, hire this person ASAP. The reality is that most UX professionals are trained mainly in 1 or at most 2 of the subject areas described here, and are strong in those areas but not necessarily the others. Holding out for that one UX hire to do all these tasks (user research, product design, interaction design, visual design, prototyping and front end development) may take a long time, if ever. Meanwhile, your product is being developed and needs to go out the door.

    The decision to hire specialists is often a practical one to help grow a team and get the right skills in the company. Instead of hiring jack of all trades people, look for “T-shaped” people: people who specialize in a particular skillset described above, with interests and work that are broad and span other UX disciplines. For example, look for a strong visual designer who understands interaction design principles and is willing to grow and learn in that area. Or hire an interaction designer who can also code and build prototypes or is willing to run user studies. Perhaps your interaction designer or visual designer can serve as a less rigorous prototyper, using tools such as InVision, Axure, or Keynote. For some products, that type of throwaway prototyping may be sufficient to move design along productively. You may have the opportunity to find a front end engineer who is passionate about design and learns everything he/she can about design — this is the only path toward being a “unicorn” I’ve ever seen that works but it is extremely rare. Furthermore, since design benefits from batting around ideas, even two people is perhaps a better configuration than one unicorn-esque employee.


    Q: If I can only hire 1–2 people, what skills should I hire?

    A: The answer to this question varies, depending on the skillset of the existing people on your team. Hiring UX people that complement existing team members is a strategic way to round out your team. If you have a great candidate in the pipeline who has outstanding skills in one dimension and a terrific attitude that makes him/her the person everyone would want to work with, hire that person and then hire another person that has complementary skills.

    Consider expanding the range of specialty UX skills at your disposal by hiring freelancers, contractors, or consultants. For example, maybe you don’t need a full time researcher but you have access to an outstanding researcher that you can hire on a contract basis. Or maybe you can hire a visual designer on a freelance basis who can create the look and feel of the site, deliver a style guide, and work with your front end engineering team to build the visual assets (e.g. grid, typography, color palette, icons, button styles, etc) into a front end library that then makes it easy for developers to create UI that is consistent.

    While it’s tempting to hold out for a jack-of-all-trades designer who can “do it all”, usually the people who most fit this profile are too early in their careers to have any wealth of experience in any specialty. Rather than hiring a junior person to do it all, consider hiring a consulting firm or studio to collaborate with you on product definition and design. Excellent firms will have senior people who will be able to quickly assess what needs to be done and help develop a direction and foundation for the product during its most formative stages. With a solid product foundation, a junior hire can then build off the foundation as new features are added.


    Q: Should I hire an interaction designer or a visual designer?

    A: Both skill sets are important for building great products, and any design candidate you interview will be more inclined toward one or the other. If you only have headcount for one kind of designer, consider what you are building and determine what skills you need most for your product, and find ways to get the other needs covered.

    If the interaction model is simple, and you need your product to be more delightful than your competitors, focus on visual design. A visual designer paired with a user researcher can sometimes help fill in the gaps created by not having an interaction designer.

    If your product is functionally complex and has many features but needs to feel simple, then focus on hiring an interaction designer. An interaction designer will methodically understand user needs, define tasks and goals, and structure the experience of the product to support complex tasks and flows for frequent use.


    Q: What’s a reasonable ratio of UX : Engineering to hire?

    A: The answer varies depending on what is being built, but in general, a ratio of 1 designer for 10 engineers (including front end and back end) is a reasonable guidepost.


    Q: What’s the right mix of junior and senior people? 

    A: I recommend reading (former Yahoo web developer manager) Mike Lee’s essay on “How to Recruit and Build and Effective Team of Developers” which really applies to any kind of team, not just developers. Mike gives great guidance on how to think about the breakdown between senior / junior people and the differences in what to look for when interviewing them.

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    A dozen things I’ve learned from Vinod Khosla Tue, 01 Jul 2014 07:05:58 +0000

    This post originally appeared on Tren Griffin’s website 25iq, where he blogs about business models, investing, technology and other aspects of life he finds interesting. Tren works for Microsoft and previously was a partner at Eagle River, a private equity firm. This post is part of a series, which includes “A dozen things I’ve learned from… Marc Andreessen, Reid Hoffman and about marketing, distribution and sales.”

    1. “It doesn’t matter what your probability of failure is. If there’s a 90% chance of failure, there’s a 10% chance of changing the world.” “Most technology startups fail. There’s a winner, and there’s 7 out of 10 that lose.” “I don’t mind failing, but if I succeed it better be worth succeeding for.”  “I have seen too many startups where they have reduced risk to a point where they have a higher probability of succeeding, but if they succeed it is inconsequential.”

    If you have been reading this series of blog posts you have heard me write repeatedly that there are power law distributions in venture capital and that they are persistent over time. There is (1) a power law within a top tier venture capitalist’s portfolio and (2) power law in terms of the distribution of returns among venture capital firms. Surprisingly few people who see one of more of these power law distribution asks an obvious question: why there is a power law? Vinod Khosla and other great venture capitalists understand that the economy, markets, companies and other aspects of the world are complex adaptive systems, which means they are often nonlinear and have many relationships which have hazy cause and effect. Making relationships even more complex is the fact some future states of the world are unknown and probability is not even computable. Richard Zeckhauser calls this the domain of “ignorance”.  A matrix which depicts one set of important relationships that impact venture capital, based on my interpretation of the ideas of Nassim Taleb, is as follows:

    Relationships that impact venture capital

    Because success in an industry is driven by the fourth quadrant/ignorance,successful venture capitalists understand that their objective is not to predict outcomes with certainty, since that is not possible.  The task of a venture capitalist is instead to experiment on a trial and error basis in order to discover success from within a portfolio of 30-40 bets that have optionality. Which of these bets will pay off will be apparent only after the fact since success will emerge from the complex adaptive systems. Optionality reflects itself in the power law distributions which are familiar to any venture capitalist. There are top down financial constraints which limit the number of big winners in the venture capital industry to ~15 per year. About 200 active venture capital firms share in those ~15 deals, but in the form of a power law distribution.  Fred Wilson, who I will write about soon, has written a post on the top down constraints which impact the venture capital industry. Andy Rachleff wrote a related post on venture capital economics this week. Andy and Fred don’t agree on everything, but the points they make are directionally similar. The data I have seen in industry venture capital databases puts me in Andy’s camp to the extent they disagree.

    2. “We are in the company building business, not in the ‘deal’ or ‘capital’ business.” “I don’t think of myself as being in the investing business. I think private equity investors are very much in the business of doing deals, putting money in, getting money out. To me, that is a very, very different business and all that they are doing is spreadsheets. I think of myself in a completely different business of building companies. I have not made IRR calculations on a spreadsheet ever since 2004. I either believe or I don’t. If I believe, then my goal is to get involved and make things much bigger and help them be successful. It’s a different kind of business.” 

    Great venture capitalists are focused on building companies and relationships rather than doing deals. Building a real company means building new value through genuine innovation. What Vinod is saying is that the result is so far into the fourth quadrant or the domain of ignorance that using spreadsheets is useless for venture capitalists since the inputs can’t be qualified. What a wise venture capitalists knows from experience is that if a team of individuals make 30-40 bets in each fund with potential for 10-2000X upside, it is likely that 1-4 of those bets will pay off, even though 50% of the bets will be a total write off and the rest will return on some capital or generate a modest return. Only those venture capitalist who have the skill and contacts to source the best opportunities and provide the entrepreneur with the right network of contacts and assistance will see these returns. Why the power law? People do not make decisions independently. Founders, employees, venture capitalists, and customers are all attracted to success and that success compounds in the form of a lollapalooza.

    3. “If you’re doing what everybody else is doing, you’re not doing anything interesting, and we won’t want to invest.” “Doing things at the edge is what venture is about.” “I don’t even invest in businesses where six other people have the same technology.”  “The idea is how can you turn a technology advantage into a business advantage? It’s much more like playing a chess game than it is investing. It is strategic, it depends how much you can help the company. Therefore, it is much more fun.” 

    You can’t outperform a market (which reflects the consensus view) by adopting a consensus view. By definition outperforming a market means being different. The lineage of this thought goes back to Ben Graham through investors like Howard Marks.

    4. “We seek out unfair advantages: proprietary and protected technological advances, business model innovations, unique partnerships and top-notch teams.” 

    This is what Warren Buffet calls a “moat” and Michael Porter calls “sustainable competitive advantage.” Without a moat competition will inevitably drop prices to apoint where there is no economic profit. If you want to understand moats make sure to read some Michael Mauboussin.

    5. “We invest more in people than in a specific plan, because plans often change.” “Failing quickly is a good way to plan. Failing often makes failures small and successes large….In small failures you accumulate learnings about what works and what doesn’t. Try many experiments but don’t bet your company on just one, keep trying, keep failing small.” “There are probably three or four things you can control out of ten that matter for the success of your company.” Competitors control another three or four. “The rest is just luck.” Partly for that reason, he is dismissive of business plans. “I’ve never seen one that’s accurate.”  

    Entrepreneurs who can adapt are far more likely to achieve great success. No plan survives first contact with the competitors and customers in a real market. Investing in great teams generates optionality since great teams can adapt. 

    6. “Bad times come for every startup – I haven’t seen a single startup that hasn’t gone through a bad time. Entrepreneurship can be very very depressing. If you really believe in your product, you stick with it.” 

    A real business operating in the real world is never about perfect execution. The great founders and venture capitalists have tremendous will to succeed. Many great successes were at one point millimeters away from failure. And I suspect that many great failures were millimeters away from success. 

    7. “Seeking an acquisition from the start is more than just bad advice for an entrepreneur. For the entrepreneur it leads to short term tactical decisions rather than company-building decisions and in my view often reduces the probability of success.”

    I see this far too often.  If money is all that makes your world go around, venture capital or starting a company is not the business for you. You won’t make the right decisions and you won’t be happy. 

    8. “We prefer technology risk to market risk.” 

    There are many different types of risk, one of which is technology risk. If you are a skilled technologist, technology risk is within your circle of competence.  If technology is not within your circle of competence, it is best to avoid technology risk (like Warren Buffett does). Risk comes from not knowing what you are doing. Taking risk in areas in which you know you are competent is wise. It is important to note that risk is not uncertainty. It is in the domain of uncertainty that mis-priced bets are found. The best time to make bets is when uncertainty is high, like buying stocks or  a venture capitalist investing in a startup in 2009.

    9. “How would you compete against yourself?” 

    This quotation is straight up Clayton Christiansen: “managers should talk about a possible innovation as something that could threaten their core business — if someone else were to do it first. Research indicates that threats, rather than opportunities, mobilize resources much faster.” Any business should be doing this, since almost certainly their competitors are doing so.

    10. “I generally disagree with most of the very high margin opportunities. Why? Because it’s a business strategy tradeoff: the lower the margin you take, the faster you grow.” 

    This is the sort of statement Jeff Bezos makes.Your competitors high margins are your opportunity to grow and absolute dollar free cash flow can be better with lower margins since you can sell more. My blog post on Jeff Bezos discussed this point in detail.

    11. “Where most entrepreneurs fail is on the things they don’t know they don’t know.” 

    There are big differences between risk, uncertainty and ignorance. Risk is present when probabilities are known, uncertainty when probabilities are not known and ignorance when future states are not known and probability is not computable. 

    “Things go wrong. There is lots of uncertainty, and there are times when you’re unsure of yourself. I’ve found that the less people know, the more sure they are.”  

    This is something that has always troubled me.  A great story half told is somehow more convincing usually because muppets suspend disbelief since they want so very much to get rich quick. The best venture capitalist and founders are learning machines, because they realize that there is no end to what you can learn.

    12. “The single most important thing an entrepreneur needs to learn is whom to take advice from and on what topic.” “Entrepreneurs could get such great help, but instead they think they need money. It’s this sort of schizophrenic divide between worrying that you’re going out of business and dreaming big that’s needed. Sophisticated entrepreneurs know this. Less sophisticated entrepreneurs don’t even know whom to ask for advice. They’ll ask a marketing and a technology question to the same person. Ask different questions of different people, both those who have been successful and those who haven’t.” 

    The concept of a circle of competence applies not only to your own skills but to the people who you seek advice from. Risk comes from not knowing what you are doing. To reduce risk, find people to advise you who do know what they are doing. It’s that simple.


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    Dare to disagree Tue, 01 Jul 2014 05:38:30 +0000 Margaret Heffernan is the author of “Willful Blindness: Why We Ignore the Obvious at our Peril.” Previously, she served as the CEO of InfoMation Corporation, ZineZone Corporation and iCAST Corporation. 

    In this talk, learn why its important for leaders and organizations to cultivate a culture where people can dare to disagree based on her extensive research on willful blindness.



    Dare to disagree with author, Margaret Heffernan

    Why did Excite believe that page rank did not matter? In the early days of Microsoft, why did they ignore the Internet? Why did it take so long for Google to realize that social networking matters? These examples taken together show that companies, even with really smart people, are still susceptible to willful blindness.

    Human beings are hard wired to be obedient and conformist, and we know from bystander theory that the more people who see something going wrong, the less likely someone is to intervene. In fact, over 85-percent of people surveyed at companies claim they are either afraid to speak up or they don’t because they think it’s futile. This recasts the job of the leader to create conditions in which the smart people we hire are willing and able to speak up and challenge us.

    What are some of the antidotes to willful blindness?

    1. Diversity: Bias has a biological basis. Our brains prefer information and people that are familiar. We are confident in people who are like us; they confirm us and our beliefs, but what we really need is people who are different than us with different thinking styles and backgrounds.
    2. Humility: We need to create conditions where speaking up is seen as vital, important and respected.
    3. Curiosity: In execution mode, we develop tunnel vision, especially if we are surrounding by people who think like us. What we need instead is curiosity – people whose minds wander and whose brains are supple.
    4. Hard questions: We must create conditions where it’s okay to ask hard questions. If I am wrong, what should I expect to see?

    Willful blindness is really a human condition; it helps us do things in the face of the unknown, but we must nurture environments for conflict and structured debate in order to mitigate it.


    kv_summit_Dare_to_disagree_Margaret Heffernan


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    Company culture and downtown Las Vegas Thu, 26 Jun 2014 21:35:28 +0000 In this video, hear from Zappos founder/CEO, Tony Hsieh, as he shares one of his core tenants – a great brand is a story that never stops unfolding – and how that led to their focus on the redevelopment of downtown Las Vegas.



    Company culture and downtown Las Vegas with Tony Hseih, CEO of Zappos

    When Zappos reached a stage of growth that it began to think about building a large corporate campus, they decided to turn the concept inside out focus on the ecosystem and community around them, instead of just looking internally. The goal was to build a place where it’s unclear where the campus ends and the city begins encouraging interaction between the company and the community. Research shows that most innovation comes from something outside your industry.

    “Think of the city as a startup…. how many times do you have the opportunity to shape the development of a major city?”
















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    ThoughtSpot: Democratizing access to data Wed, 18 Jun 2014 11:30:45 +0000 In the early days at PayPal, key decisions were empirically driven, and the leadership team expected every employee be just as analytical. As a result, the entire team became facile with the metrics driving the business and insisted that regardless of seniority, each employee make rational calculations on their own. To enforce this norm, almost every all-hands meeting consisted of distributing a printed Excel spreadsheet to the entire company to conduct line-by-line reviews of performance (this is only a modest exaggeration!). Even after PayPal’s IPO, this level of data-driven transparency was so ingrained in our culture that we compelled our legal counsel to allow us to continue 95-percent of this practice (albeit stripping the explicit revenue line from the printout).  

    In stark contrast to the transparent data-driven culture at PayPal, many entrepreneurs I meet are frustrated their colleagues do not make decisions in the best possible way. To address this, many of the companies I counsel are striving to create a transparent culture where each member of the team is fully informed. These goals, however, are often limited by software. Over the last decade, many great tools have emerged to allow some teams within companies to improve decision-making, yet none of the software has been effective at redefining how companies operate.

    Today, I’m excited to announce KV’s investment in ThoughtSpot, a company that will transform how businesses use and interpret data. ThoughtSpot combines the best practices of the consumer web, which all employees understand how to navigate, in order to manipulate and digest massive amounts of enterprise data. Nevertheless, queries are effortless and fast, driven by a simple user interface that rapidly renders results that are easy to grok at a glance. 

    I don’t often lead investments in companies selling to enterprise, but ThoughtSpot has the potential to dramatically impact the culture of companies by truly democratizing access to data. While existing business intelligence tools require technical expertise to convert raw data into meaningful information, ThoughtSpot empowers employees at each level and every area from customer support to marketing and sales to be their own data analysts. The data transparency will enable each employee to become effective decision-makers or mini-CEOs. As an executive, ThoughtSpot is the product I always wanted to deploy and am thrilled to help make it available to everyone.

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    Reengineering everything with software Tue, 17 Jun 2014 21:40:17 +0000 In this video, hear from Daphne Koller, co-founder of Coursera, on how technology allows us to provide education to anyone at effectively zero marginal cost per student.



    Re-engineering everything with software with Daphne Koller, Founder / Coursera

    graphic recording daphne koller

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    MIT Tech Review / Fireside chat with Vinod Khosla Tue, 17 Jun 2014 19:47:22 +0000 At some point, flying got too complex to risk in the hands of human beings. Now, there’s autopilot, but humans are still there to deal with emergency situations. Some combination of humans and machines will be the right answer for health. The machine may be better than the human alone, but human and machine is better than the computer alone. 

    In this talk, hear from Vinod Khosla about the future of health, how patients should be empowered to be the CEOs of their own health and some of the hardest questions facing society today.

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    The unbreakable laws of storytelling Wed, 11 Jun 2014 22:11:06 +0000  

    Carmine Gallo is a communication coach and author of several bestselling books including Talk Like TED: The 9 Public Speaking Secrets Of The World’s Top Minds. He recently spoke at the KV CEO Summit.

    A version of this post also appears on


    Ideas that spread all share the following the three components. They are:

    1. Emotional

    Persuasion occurs when you touch a person’s heart before reaching their head. Passion is everything. You cannot inspire and persuade unless you’re inspired yourself. Steve Jobs wasn’t passionate about computers. He was passionate about designing tools to help people unleash their personal creativity. Zappos founder Tony Hsieh didn’t focus on shoes because that’s not what he’s passionate about. Shoes might be what his company sells online, but Hsieh is passionate about delivering happiness—what makes customers happy and what makes employees happy. A passion for happiness allows Zappos to grow in so many more directions than it otherwise would have if Hsieh had decided to build an online company that strictly sold shoes.

    Before you pitch your company story ask yourself, “What makes my heart sing?” The answer to that question is your passion and should set the foundation for the rest of your conversation.

    You can transfer your passion through the emotional connection that stories provide. Stories inform, illuminate and inspire. A remarkable thing happens to our brains on stories. Researchers at Princeton University are finding that if I tell you a story, the same regions of our brain show blood flow in fMRI studies. That means our brains are in-sync. Astonishingly, the same research finds that if I tell you a story in another language that you don’t understand, the MRI will not show the same results. It’s not the fact that I’m speaking that connects us; it’s the story that creates meaningful connections between two people.

    Using TED talks for my analysis, I spent 500 hours researching public presentations that went viral. In some cases the presentation had been viewed up to 20 million times. The best speakers spend 65-percent of the presentation telling stories that reinforced the theme of their talk (data and statistics made up 25-percent of the content and establishing credibility contributed the remaining 10-percent). Data and statistics are very important for investors, but make no mistake—you must connect with investors, employees and other stakeholders on an emotional level if you hope to inspire those audiences to back your ideas.

    2. Novel

    Ideas that spread teach us something new. According to Berkeley neuroscientist Dr. A. K. Pradeep, “Our brains are trained to look for something brilliant and new, something that stands out, something that looks delicious.”

    Ideas stick when they are packaged as new, surprising and unexpected—something ‘delicious.’ When the brain detects something unexpected or surprising, it immediately says, “Oh, here’s something new. I’d better pay attention.” The chemical dopamine is released, which acts as your brain’s natural save button. Dopamine is so important to retention and learning that when it’s present we tend to remember an experience or a message. When it’s absent, nothing seems to stick.

    In my presentation, I asked the audience to raise their hands if they had seen the video of Steve Jobs launching the first iPhone in 2007. I then asked those who had raised their hands which part of the presentation they remember. “The part where he introduced three products,” one person called out. “I predicted you would say that, which is why I’m going to show you that portion right now,” I said as I rolled the video of the presentation. Every time I ask the question I get the same answer. Steve Jobs introduced the product in a way that was unexpected, surprising and novel. He told the audience that Apple would introduce three products—an mp3 player, a phone and an “internet communicator.” Jobs then slowly repeated the products several times before revealing, “Aren’t you getting it? These are not three separate devices. This is one device and we’re calling it the iPhone.” The brain cannot ignore novelty.

    3. Memorable

    Ideas that spread are easy to recall. You can have great ideas and a great story, emotional and novel, but if nobody can remember what you said it doesn’t matter! Memorable stories are shared, spreading the message much further than its immediate audience. Here are three techniques for delivering a memorable pitch or presentation.

    • Create a “Twitter-friendly” headline. The brain craves meaning before details. People need to see the big picture before details. When Steve Jobs introduced the MacBook Air for the first time he called it, “the world’s thinnest notebook.” In one sentence you get it immediately, and it fits in a Twitter post of 140 characters. At the KV Summit I was impressed by how many entrepreneurs had refined their message to one powerful sentence.
    • Use pictures instead of text whenever possible. Neuroscientists who study the field of persuasion use the phrase “picture superiority” to describe the visual display of information. It simply means that people remember ideas better when they are presented as pictures and words instead of words alone. If I deliver information verbally, you’re likely to remember 10-percent of what I said. If I add a picture, retention soars to 65-percent.
    • Stick to the rule of three. The rule of three simply means that in short-term or “working” memory, most of us can only carry about three pieces of information. If you give investors 18 reasons to back your idea, they’ll forget the entire list. Give them three compelling reasons supported by stories, examples and statistics.

    Ideas are the currency of the 21st century. You are only as valuable as the ideas you have to share, but if you cannot persuade enough other people to take action on those ideas, ideas are just neurons firing off in your brain. Failing to captivate your listeners with your story has disastrous consequences—products fail to sell, ideas fail to get funded and careers fail to soar. Your ideas are meant to be heard. They might very well change the world. Tell your story persuasively to capture the imagination of your audience.


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    Wired / The prognosis for data-led medicine is healthy Fri, 06 Jun 2014 22:41:20 +0000 This article appears in the June 2014 issue of Wired magazine.

    Today’s medicine is more practice than science, albeit intelligent practice. Too much is left to qualitative judgments based on tradition, experience and dated, often un-tested, beliefs. But we are about to make a quantum leap in the capabilities of medicine driven by digital health technologies, sensors and data science. It’s only a matter of time before this leap in technology empowers individuals to become the CEOs of their own health.

    There are a number of nascent efforts, Lumiata and IBM’s Watson among them, that capture medical literature and use natural language-processing and curation by human doctors to make this information available to medics and consumers. There are also efforts to validate today’s accepted medical practices using patient records to assess the performance of the approximately 15,000 therapies that we currently employ. As the body of data and data-science insight grows, this knowledge will become increasingly personalised to the condition of each individual and be made available to patients. This will allow patients to understand their medical choices and empower them to make more of the treatment decisions they otherwise are forced to accept today for lack of knowledge.

    These systems will be complemented by wearable sensors, which will collectively generate swathes of data. Initially, this data will represent traditional medical variables such as blood pressure, respiratory rate, blood-glucose correlations or cardiac output. Over time, patient activities, in addition to thousands of biomarkers from blood, urine and breath, will be monitored by smartphone apps.

    Mobile-phone-based ECGs, blood-pressure and heart-rate monitors, skin-hydration sensors, blood-glucose monitors, contextual data trackers, stress monitors and many more sources of data will feed into increasingly sophisticated machine-learning systems. Smartphone apps will serve as constant monitors, help with behaviour modification and even replace drugs. In the US, the Food and Drug Administration has already approved the AliveCor ECG device as an over-the-counter purchase so any cardiac patient can take their ECG at any time. It has also approved WellDoc, a type-2 diabetes management app. And the smartphone app can monitor a patient’s mental-health status more accurately than any human.

    The best doctors will monitor and train these systems and curate their input and output, and eventually the systems will exceed the capabilities of their creators. Taken together, the human/machine combination will exceed the performance that either could possible achieve alone.

    Technology also will take into account factors such as comorbidity, genetics, lifestyle and many others that tend to be neglected by doctors. The volume of data and insights about patients’ complex conditions is more than humans can easily interpret, but computers can manage far more inputs and recognise patterns and anomalies. When human doctors are not present or when only those with lesser medical training are available, these systems will be able to personalise care. Patient options today are sometimes limited by the bias of individual doctors; the balance of power in such decisions will shift to the patient.

    The new systems will not eliminate the need for the human element of care, but the kinds of people providing care will change. Over time, the need for full medical degrees to perform most functions will decline, and medical professionals with lesser training will be able to do a lot more. And when an MD is involved, they will have more information, knowledge and guidance available to them.

    Data will fundamentally change healthcare, and individuals will be empowered to manage their care as technology grants them unprecedented tools.

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    Design is… Sat, 24 May 2014 02:50:04 +0000


    Startup success: design is as critical as technology

    I joined Khosla Ventures as an operating partner two weeks ago, focusing on design for the portfolio companies. At the annual KV Summit this week, I had the opportunity to share my thoughts on design with the CEOs in our portfolio companies.









    Design is as important as technology

    Today, design is as important as technology. I was meeting with a startup last week when the principal architect asked me why is design more important now than ever before?  And to answer that, let’s reflect on the evolution of automobile design.

    When the Model T first came out, the focus was on getting the technology right.  We labored over getting the car from point A to point B and laying infrastructure down to support automotive networks.  Back then, consumers did not have much choice in the design of their car.  Cars were offered in black, black, or black, in this style only.  Then, as technology and infrastructure became good enough, design became the differentiator.  It wasn’t enough for your car to be fast, but it also had to look fast, or expensive, or powerful. Design has become the differentiator for the car market.


    Similarly, in the early days of the internet, the major challenges of the day were focused on getting it to work, reliably moving packets from A to B across proxies and servers and operating systems.  Technology was so expensive that it required a lot of capital to form a company, and the technology was not yet widely in the hands of most consumers.  

    We’ve reached a stage where technology is now good enough.  We have sensors and chips where we need them when we need them.  We have compute cycles either in the device or in the cloud.  We have storage for us to save every moment of our lives in high definition.  Bandwidth is now fast enough that the internet just feels like it works.  Not to say all the problems are all solved or that this future is evenly distributed across the planet, but the challenges of product development are now shifting towards building useful and emotional experiences that people get from using and interacting with technology.  

    Another factor driving the rise of design particularly in enterprise markets is the consumerization of IT.  As consumer users, we enjoy the simplicity and power of applications like Google Docs and Gmail, and we don’t want to spend 10 hours a day in Microsoft Office and Outlook anymore.  Google had an explicit strategy of spoiling users at home so they would demand the same tools at work.  Moreover, younger generations are just living on the internet, and this is what they know and feel comfortable with.

    Microsoft Office and Outlook vs. Google Docs and Gmail



    Let’s play a game… I airbrushed the logos out of some car pictures.  Can you identify what car this is?

    Guess what cars these are

    Some of these cars are easily recognizable.  Why?  They include design elements that get carried over from generation to generation, and across each model car in the portfolio.  The design of these cars is so consistent that you instantly recognize what they are.  The cars that are less recognizable suffer because they lack this consistency.  Lexus, for example, changes their designs every 2-3 years, which makes our mental models of what the car looks like less stable in our minds and thus harder to recognize.




    When we think of brands, we think of logos and identities.  But these are just symbols that represent companies.  A company’s brand is consumers’ perception of that company, and that perception is built up over time, through experiences.  When a consumer is interacting with your company through any capacity, you are literally in the process of creating your brand.  Because consumers are interacting with companies mostly through their products, the fastest way for companies to build a strong brand is through design consistency.  Thus, design is the brand.




    Here are some products designed and sold by Muji.  Muji is a Japanese company that sells common affordable household items with better design and lower cost packaging.  Muji refers to its design philosophy as “Kanketsu”, which translates into “Simplicity”.  Their aim is to “bring a quiet sense of calm into strenuous every day lives”.  There is a Zen-like quality to their product design, and even though these products are simple and affordable, they don’t feel disposable.

    Muji products exemplify "kanketsu"


    … but is very DIFFICULT to achieve!

    Simplicity is easy to say but hard to do. Let’s look at the evolution of the Google home page as a case study.  This is what Google looked like in 1999….

    Google 1999

    Google 2001

    Google 2002

    Google 2006

    Google 2007

    Google 2011

    Google 2014

    It wasn’t until 2014 that Google truly achieved a simple home page, even simpler than what it looked like when it first launched.  It took 15 years in the making of a company to achieve this level of simplicity, and certainly not because of lack of will or talent.  That it took this long shows how difficult it is to achieve simplicity in the face of many people’s opinions, competing agendas, and growing product requirements and features. It’s a simple design, but was an incredibly difficult journey to get there.



    Let’s look at the products from Braun produced in the middle of the last century, under the direction of Dieter Rams.  Dieter Rams joined Braun in 1955 and had a forty year career there, eventually becoming their Chief Design Officer.  The key principle that drove the design direction for all of Braun’s products during this era was “Less, but better”, the idea being that the products would be stripped down to only what is essential, that the essential would be amplified, and made better.  These products are so streamlined that they are elegant and modern, and still relevant, even though they were designed decades ago.

    Braun product design principle: "Less, but better"

    Whether we’re talking about product design or graphic design, great design is iconic.  It’s not a fad, not showy, not trendy, not easily thrown away.





    Design is all about the details, yet it’s the details that we often overlook, or take for granted, or forgo because we don’t have the time or resources.  But there is no great design unless there is great attention paid to detail.  

    The details matter because they directly impact how we feel about a product or service after we interact with it.  For example, here is a picture of a typical bridge with wrought iron railing. The vertical slats make you feel like you’re in prison.  In Japan, when you look at railing, you get the sense that people are always thinking about how they can make even the mundane delightful.

    Japanese railings are an opportunity to make the mundane delightful

    Manhole covers are another example.  A typical manhole cover in the US looks like this:

    U.S. manhole cover


     Yet when you look at manhole covers in Japan, every single manhole cover is beautiful, inspired, and different, making the journey through the streets of Japan more entertaining and joyful.

    Japanese manhole covers are beautiful

    In some contexts, attention paid to design details means the difference between delighting your users or not. In other contexts, insufficient attention paid to design details can impact conversion, adoption, engagement, and user trust.


    DESIGN is EMPATHY made tangible

    Design details include not only how things look but also how they work, their ability to satisfy your needs, and the emotions you feel from interacting with them.  To create a great experience for users requires tremendous empathy for others, an understanding of their needs and motivations.  

    Let’s look at another example from Japan.  Here is a ticket counter at a subway station.  At the edge of the counter is a plastic strip, placed there so one can rest their umbrella or cane there while they fish out money for their ticket.  Whoever designed this must have had tremendous empathy and compassion for people to have the insight to include this detail here.  And whoever was writing the check for the creation of these ticket counters must have supported whoever had that design insight.

    Japanese subway ticket counter

    Going back to the Google Apps example, we use Google Apps, not just because the apps are simple and easy to use, but because of what they allow us to do.  The ability to collaboratively create and edit documents in real time, the ability to archive and search email, are functionality that people need, even if they didn’t understand that they wanted to do be able to do those things before they existed.



    There was a study across 160 websites that looked at the impact of latency on the user experience.  Just a delay of one second, resulted in a 7% decrease in conversions, 11% in page views, and 16% decrease in customer satisfaction.

    Google really took this design insight to heart.  While Braun’s design principle was “Less but better” and Muji’s was to “bring calm to people’s stressful lives”, Google’s main design principle has always been “Fast”.  This principle has informed every design decision, and is reflected throughout the experience.  For example, we show how long it takes to serve a search result. We strip away the page of clutter so users can better focus on the results.  We know from human interface research that black text against a white background provides the best contrast for reading text on screens, thus enabling people to get to their destination faster.





    While the insight that latency matters was very much a design driven insight, the commitment to speed went beyond the purview of the design team.  This value permeated throughout the company, from billions of dollars of capital outlay to create infrastructure to make web search as fast as possible to company OKRs centered around reducing latency.  This aspect of the user experience could not have been achieved without a company wide commitment.

    When we think about design, we often think about how a product looks.  As makers of technology we might also understand deeply that design is not just about how a product looks but how it works: components that enable people to use your product, and how it all fits together.  All that cascades from your company’s strategy, values, and principles, and the scope of the problem you choose to tackle.  All of that manifests itself in the design of the experiences you offer.  

    The whole state of the company manifests itself in the UI design (credit: Jesse James Garrett)

    Just as a person’s posture can reflect his or her inner state, so does your product’s design reflect the state of your company.  I’ve seen org charts, power struggles, and agendas manifest through design.  I’ve seen the absence of strategy, values, principles, and a clear point of view manifest through design. You need to think about design from the inside-out. You can’t fix your design without fixing these deep issues and this is why every CEO is a designer, whether they recognize it or not. If your expectation is that your design team can work around or patch over your company’s organizational issues, power struggles, and agendas, or lack of strategy, clear values, principles, or point of view, you’re shunning your responsibility in making design great for your users.



    Love and RocketsI’m a fan of 80s alternative music.  While preparing for this talk, I was reminded of a song from one of my favorite bands from that era, Love and Rockets.  In that song, “No New Tale to Tell”, they sing “You cannot go against nature, because if you do / go against nature / that’s part of nature too”.  I think this is a nice way to think about design.  You cannot have “no design”.  Because whatever you end up with, whether you pay attention to design or not, is your design.  There is only careless design or thoughtful design.  Choose to design thoughtfully.

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    Big data, better health Tue, 20 May 2014 21:08:56 +0000 In this video, hear from founder/CEO, Anmol Madan, as he explains how the explosion in data and sensors transitions care from episodic data to continuous insight, which results in improved clinical outcomes and cost savings. 



    The practice vs science of medicine

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    Company building Tue, 20 May 2014 19:25:20 +0000  


    Company Building with Vinod Khosla of Khosla Ventures



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    Pitch the way VCs think: Presenting powerpoint with emotion Tue, 20 May 2014 19:25:08 +0000  


    Pitch the way VCs think: presenting powerpoint with emotion













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    “20% doctor included”: Speculations and musings of a technology optimist Sat, 17 May 2014 22:47:48 +0000 Healthcare today is broken. It’s the result of approaching medicine according to practice and tradition, rather than real science primed by statistically validated data and conclusions.  Healthcare must move away from the system of small trials and experiential evolution of best practices to a state unencumbered with the conflicts of interest that currently lead to suboptimal results. Doctors today are doing the best they can given the current system, but we should embrace the new opportunities ahead of us.

    Technology will reinvent healthcare as we know it. It is inevitable that, in the future, the majority of physicians’ diagnostic, prescription and monitoring, which over time may approach 80-percent of total doctor time spent on medicine, will be replaced by smart hardware, software, and testing. This is not to say 80-percent of physicians will be replaced, but rather 80-percent of what they currently do might be replaced, leading to new possibilities and functions for the physicians.  Healthcare will become more scientific and more consistent, delivering better-quality care with inexpensive data-gathering techniques, continual monitoring, more rigorous science and more available and ubiquitous information leading to personalized, precise and consistent insights into a patient. Disease will be measured not by the symptoms it creates but objectively evaluated by the metabolic pathways or physical parts it affects. Many new findings will be outside the reach of most physicians because of the volume of data and the unique holistic insights that data will provide about a patient’s very complex condition. Hundreds of thousands or even millions of data points may go into diagnosing a condition and monitoring the progress of a therapy or prescription, well beyond the capability of any human to adequately consider.

    This evolution from an entirely human-based healthcare system to an increasingly automated system will take time, and there are many ways in which it can happen. Today’s traditional approaches will get better as new approaches, and even new medicine, is invented. The remaining 20-percent of physicians’ work will be AMPLIFIED, making them even more effective, and allowing even the average physician or nurse to perform at the level of the very best specialists. Doctors will be able to operate at substantially improved levels of expertise in multiple domains, and they also will be able to handle many more patients. The primary care physician and maybe even the nurse practitioner may be able to operate at the level of six specialists handling six areas of care for one patient with multiple comorbidities in a more coordinated and comprehensive manner without inter-specialist conflicts. This transition will affect each group of actors in the current system differently. Some constituencies will be affected favorably in some dimensions and worse in others, but the net benefit will be substantially positive for society and individual patients.  It is likely that a focus on science, data, and personalization will lead to plenty of unintended benefits that we cannot anticipate today. Nurses will be made much more capable by technology, often replacing the functions only doctors perform today. New medical insights, including ones we cannot yet envision, will be commonplace, and the practices we follow will be substantially better validated by more rigorous scientific methods.  Though medical textbooks won’t be “wrong”, the current knowledge embodied in them will mostly be replaced by much more precise and advanced methods, techniques, and understandings.

    My statements are not forecasts that the hospital burn unit or emergency department will run without any humans on staff. Though the early changes will appear underwhelming and clumsy, by 2025 they will seem obvious, inevitable and well beyond the changes we might envision today. Expect today’s expert doctors to think these changes are implausible when they are asked about this possibility, and expect the classic response of “human judgment will not be replaced by technology” from people who are not qualified to judge what software technology in 2030 might be capable of.  The role humans will play in this is hard to define exactly but I suspect strongly that their role in healthcare will change materially.  It is possible that a much more cooperative system leveraging both humans and technological systems in their respective strengths may also evolve, as proposed in the book Race Against the Machine, but the core functions necessary for complex diagnoses, treatment, and monitoring (as a significantly expanded function of healthcare) will more than likely be driven by machine judgment instead of human judgment.  In fact, as Atul Gawande pointed out, some studies showcase that “our attempt to acknowledge and deal with human complexity [in human ways] causes more mistakes than it prevents.” [1]

    The transition will happen in fits and starts along different pathways with many course corrections, steps backward and mistakes as we figure out the best approach. Given the importance of having clarity on what I hypothesize as my forecasts, I want to be clear that they are only directional guesses rather than precise predictions. Further, though many different disciplines will contribute to the innovation in medicine like biological research or new device development, I am mostly concerned with the contributions of digital health technologies to medical innovation. This should not be underemphasized, as these contributions, though potentially the most significant, are also the most variable, and hardest to predict in direction, timelines and scope.  The other sciences will continue to contribute much more fundamental insights into human well being…

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    Harvard Business School / Renewable energy: An investment perspective Sat, 17 May 2014 05:59:39 +0000 In this talk at Harvard Business School, Vinod Khosla discusses emerging opportunities in sustainable energy. 

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    Designing the future: Making technology more accessible Wed, 23 Apr 2014 06:19:56 +0000 Design matters. In 1980, when I was working on my first startup, Daisy Systems, I hired my first designer, David Kelly. This was long before his IDEO days and much to the chagrin of people who thought we were wasting precious venture money. The attitude towards design has since changed dramatically; mobile is the ultimate example. Cell phones were around for decades and then the iPhone came along and that changed everything. It also changed the perception of design’s role in technology, not just in terms of aesthetics but also in user experience and design thinking.

    Design makes technology accessible and effective. Whether it’s hardware or software innovation, at Khosla Ventures, we understand design’s power to make even the most complicated technology usable. It even goes beyond that and has the ability to define a brand in a more organic way than traditional marketing is able to achieve. We see this in many of our portfolio companies from Nutanix’s IT console to Jawbone and Square’s consumer products. We constantly look for the best design thinkers to work with our portfolio companies, and today, I am excited to announce the newest addition to Khosla Ventures, design operating partner, Irene Au.

    Anyone who uses the Internet has been touched by Irene’s work. She was among the earliest designers on the Internet and helped birth the first web browser to achieve mass adoption – Netscape. She then went onto join Yahoo as the company’s first interaction designer, where she established human centered design practices to influence web product development. Yahoo was one of the earliest companies that employed product design to define their brand with a strategy of “pull branding” by consumers instead of “push branding” by marketers. Somewhere along the way Yahoo lost its focus as a company and developed a muddled brand image.  Irene also spent six years scaling Google’s design organization, another “pull brand”, and pioneered the company’s simple design aesthetic. Since Google’s inception, focusing on users has been such a core value that branding was part of the UI design team in its earliest days. She also has spent most of her career mentoring some of the brightest design minds in the tech industry, many of whom have since gone onto influence design at such innovative companies as LinkedIn, Facebook, AirBnB, Twitter, Etsy and Rackspace, to name a few. Still others have joined design firms or started their own companies.

    Already, KV portfolio companies, like Square, are industry leaders in their approach to design. They recognize that great design is as much, maybe even more, about what one leaves out as what one chooses to include. This is a practice that Jack Dorsey calls product editing instead of product management. Designers are akin to the great tradition of newspaper editors of yore, catering to their audiences’ needs with regard to product and experience. Among the hardest things about great design is identifying and doing a few key things really well. It takes great discipline to do this effectively, and Square’s approach to product development is a reflection of that discipline.

    At Khosla Ventures, we have always believed in providing the best possible assistance to our entrepreneurs. It’s easy to simply get funding but getting good advice is much harder, which is why we continue to steadily grow our team of seasoned and experienced operators. Our operating partners offer real, targeted help to companies based on their long history of building organizations at the most senior levels. They have real life experience and actually have performed the tasks on which they now advise. Far too many people in venture have not earned this; since they themselves have not been in the same position. Design, though in vogue today, should be no exception. Irene has built and led design organizations and done interaction design, visual design, user research and front-end web development herself, enabling her to go well beyond design fashion statements to provide real, nuanced advice to entrepreneurs.

    We believe advising entrepreneurs is a job laden with responsibility, and the best advisors turbo-charge companies, but only if they themselves have done enough to earn the right to advise entrepreneurs. With our advice, prodding and challenging, we’ve done our job if a team is able to expand its opportunity and potential.

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    Open Networking Summit / Re-engineering engineering: From a cathedral to a bazaar? Sat, 15 Mar 2014 04:21:28 +0000 In this video, hear from Vinod Khosla on software-defined networking.



    ONS2014 Keynote: Vinod Khosla of Khosla Ventures

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    Cleantech Investment Insight / Exploring decentralization Wed, 05 Mar 2014 22:42:32 +0000 This is also posted on Cleantech Investment Insight.

    On March 11-13, Cleantech Group is hosting the largest and longest running Cleantech forum in the world, Cleantech Forum San Francisco 2014. This annual gathering of the global cleantech innovation community offers a comprehensive development program along with exclusive opportunities to network and make deals happen. In the lead up to the Forum, we’re chatting with leaders across the resource innovation space to discuss the changes decentralization is causing across different markets, end-users, enterprises, technologies, and business models. 

    Andrew Chung is one of six partners at Khosla Ventures, which manages over $3 billion of committed capital and has invested in over 80 sustainability companies.  Andrew serves on the boards of companies that include Lanzatech, Ecomotors, Ambri, Pellion, and BioConsortia, and also leads the firm’s Asia activities.  Prior to Khosla, Andrew helped build the firm’s cleantech practice area at Lightspeed Ventures, which invested in companies like Solazyme, Nest Labs, LS9, Coaltek, Quantumscape, and Stion. Follow Andrew on Twitter: @achung

    We’re looking forward to having you participate in Cleantech Forum San Francisco 2014. As you know, the theme is Accelerating system change: towards a decentralized future. Can you tell us about some of the changes you’re seeing underway in our energy and resource systems? 

    We’ve believed for a long time that solving the world’s energy and resource problems will require a broad approach – no single technology or central institution can solve the problem alone, and it will require enterprises and consumers to each play an active role.

    Large enterprises are embracing new technologies from our portfolio at a faster clip than ever: as customers, putting up solar panels, implementing LED lighting fixtures, installing electrochromic glass, upgrading fleet vehicles with more efficient drivetrains, and using building energy efficiency software.  Also as partners, using their balance sheets to fund commercialization for startup companies and back new financing vehicles for renewables.

    Consumers today are more empowered than ever to make a dent in the problem – when they drive their electric vehicle, install a smart thermostat, participate in an energy savings program, or rideshare. Relying on utility-scale projects alone to drive the cleantech revolution is not enough, and the decentralized actors in the system are increasingly more important in contributing to the overall solution. It’s an inspiring movement.

    What excites you most about other trends in resource innovation that you’re seeing at Khosla Ventures, and expect to have an impact in 2014?

    At Khosla, we’ve always aimed to invest in sustainable technologies across energy, food, and agriculture, and continue to be committed to that effort. With over 80 companies in sustainability, it would take a few hours to discuss all the impactful trends we track in any real depth!  Let me pick a few that I’m particularly excited about.

    One major trend is in the area of carbon mitigation – eliminating the release of carbon (CO & CO2) from industrial waste gases to boost air quality and reduce pollution. I work with Lanzatech, a company that will eliminate the world’s smokestacks by converting an industrial factory’s waste gases into valuable fuels and chemicals on-site through a unique biochemical process. Lanzatech’s potential to curb the release of greenhouse gases like CO and CO2 has dramatic consequences in China, which is why #1 domestic steelmaker, Baosteel, partnered with Lanzatech in a joint venture to fully fund their first plant outside of Shanghai.  Zero capital required from Lanzatech. This is cleantech done right. Calera is another company that’s working on solving the carbon emissions problem, by capturing CO2 at factories and converting that carbon into calcium carbonate to produce cement and other building materials.

    LED lighting continues to be a fast-growing market as the cost per lumen of LED’s continues to drop with increasing production.  We’re early investors in a company called Soraa, which was founded by Shuji Nakamura, inventor of the Blu-Ray Player for Sony. They’ve developed a material that provides five times more light per unit area than any other LED material out there.  This enables the company to produce bulbs that operate with a single point source of light making it the best performing and more attractive bulb (think Apple-style form factor) to win the market. We’re targeting less than one-year payback, and 80 to 90-percent efficiency.

    In the area of food, we’ve invested in startups that are reinventing the way we produce meat, cheese, eggs, mayo, salt, and even candy. Hampton Creek Foods, for example, uses plant science to produce egg-free alternatives for a wide range of food products – including mayonnaise and cookie dough – to disrupt the 1.2 trillion annual egg market that today requires highly energy-intensive and polluting chicken farming. We’re excited about the potential of plant and food science to dramatically reduce the resource intensity associated with raising animals.

    In transportation, we’re seeing progress in both vehicle electrification and innovations in the internal combustion engine. Battery technologies like Quantumscape, Seeo, and Pellion continue to get better, with leaps in energy density and faster charge times. The vision of developing a next-generation internal combustion engine is being realized with EcoMotors, which targets 20 to 50-percent better fuel efficiency at relative cost parity to current technologies.

    From a geographical standpoint, we’re seeing a big trend with foreign companies and investors looking at clean technologies as a way to ensure their country’s survival. China is leading the pack, recently surpassing the U.S. as the leader in renewable energy deployments and (depending on the source) is spending $40-80 billion per year in developing or rolling out clean technologies.  In the Khosla portfolio, we’re already seeing a trend of large Chinese companies partnering with our companies – including Lanzatech, Ecomotors, GreatPoint Energy,NanoH2O, and Hampton Creek, to name a few – to help the country address their survival-driven demand.

    Are there any challenges facing the market in 2014 that keep you up at night?

    With cleantech under pressure, I am concerned that fewer entrepreneurs will commit their energies to the sector and that the domestic funding gap will widen further.

    It’s important for our entrepreneurs, corporate partners, and policymakers at all levels to recognize that the need to reinvent society’s energy, water, food, and agricultural infrastructure is just too massive and critical to ignore. Taking on the incumbent industries is a multi-decade effort, and we’re only in the 2nd or 3rd inning of an extra-inning game with cleantech. We can’t afford to stand back and do nothing, lest the U.S. fall behind other countries that are willing to take a more progressive, long-term view.

    Without a doubt, private funding for sustainability has slowed in the U.S., and public funding has also declined. Companies raising funds in this environment need to understand that the bar has been set much higher. Either their technology needs to be highly disruptive and transformational, or their product/business model needs to create a strong emotional pull with end-users that facilitates rapid decentralization and fast adoption.  More than ever, incremental solutions will have a difficult time getting funded. Later-stage opportunities need to show significant market pull and customer validation with reduced scale-up risk – often with corporate partners that can take a product to market or fund commercialization.

    Looking back on the past year, what were some of the highlights?

    Despite media reports to the contrary, sustainability is alive and kicking. Companies with “black swan” type potential, resourceful management teams, and innovative business models continue to survive and thrive.  At Khosla, we aim to invest in sustainable technologies across energy, food, and agriculture that meet such demanding criteria and have seen a number of our portfolio companies make great progress on the path to commercialization. As a result, despite significant pullback on the sector from other venture firms, we have stayed committed and been successful at attracting interest for our portfolio companies.

    I mentioned Ecomotors earlier in the conversation – we just announced today the signing of a 51/49 joint venture with an engine-producing subsidiary of one of the top three auto OEM’s in China, First Auto Works Jingye (FAWJ). FAWJ will invest more than $200 million into building an engine plant – initially with a 100,000 engine capacity. This follows our first deal done in China a year ago, which was a non-exclusive licensing deal with Zhongding Power group, a large engineering and components business that is in the process of deploying $200 million to build an initial plant for the Ecomotors’ engine.  In both cases, zero capital was required from Ecomotors. This is truly cleantech done right.  Not to mention, Lanzatech recently completed a successful demonstration of its technology at one of Baosteel’s production mills, and companies like Soraa and View moving into production phase. It’s been an exciting year.

    On the fundraising front, View, maker of energy-efficient electrochromic glass windows, closed on a $100 million round recently and was one of roughly a dozen companies in our portfolio that successfully raised significant capital in a very challenging financing environment. We’re about to announce another three to five more successful financings in the next month or two.

    Tesla’s performance on the stock market was also a big story in 2013 and shows the potential value creation for a sustainable technology that achieves strong product-market fit.  Other notable venture-backed exits included Climate Corporation (backed by Khosla, acquired by Monsanto), and Nest Labs (backed by my prior firm Lightspeed, acquired by Google).

    What do you like most about what you do at Khosla Ventures?

    I am lucky enough to spend each day looking for transformative technologies and business models that have the potential to change the world for the better – from energy to food, from education to healthcare. It’s incredibly meaningful work that is made more exciting by the opportunity to work closely with partners like Vinod Khosla and Pierre Lamond, who are among the greats in venture capital. Beyond technology and team, what I like most about my profession is the ability to partner with the entrepreneurs and visionaries and work closely with them to build great companies that can overturn industries. It’s a humbling yet fulfilling experience.

    Why have you chosen to speak at Cleantech Forum San Francisco 2014? In this digital era, how important is it to connect with peers in person?

    I believe it’s important to participate in events like the Cleantech Forum to remind the participants in this critical ecosystem – entrepreneurs, investors, corporate partners, utilities, policymakers, taxpaying citizens – that the cleantech market is not only alive, it’s vibrant. Digital discourse and socialization is important, but it doesn’t replace a live forum in which to trade ideas and debate issues. Given the importance of partnerships to succeed in the cleantech world, I think it’s more critical than ever for key stakeholders to meet face-to-face to build trust and nurture relationships.

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    Rockefeller University Insight Lecture Series / 2030: 20-percent doctor included? Wed, 12 Feb 2014 17:02:33 +0000 “Silicon Valley is not a place but a state of mind.” – Vinod Khosla

    In this talk, Vinod will speak about the ways in which he’s seeking to apply Silicon Valley principles and approaches to transform, even foster a revolution in, healthcare. We’ll hear Vinod argue that much of what physicians do can be done better by well-designed sensors, passive and active data collectors and analytics without taking away the human element of care.



    The Rockefeller University: Insight lecture video

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    Open letter to 60 Minutes and CBS Wed, 15 Jan 2014 07:53:57 +0000 To: 60 Minutes and CBS

    Attn: Lesley Stahl, Jeff Fager, David Rhodes, Leslie Moonves

    On January 5, 2014, CBS’ 60 Minutes aired a segment titled, “The Cleantech Crash” that grossly misrepresented the state of the sustainable energy industry.

    At Khosla Ventures, we are focused on finding real solutions for energy independence, rather than just pontificating. The pontificators at 60 Minutes, with their agenda-driven bastardization of news reporting, failed to do the most elementary fact checking and source qualification, as was the case with your Benghazi reporting. No wonder one major media outlet wrote that you have been “widely criticized for leaving out crucial information about the state of the clean tech sector.” Is this the new CBS standard?

    The errors in your story are numerous.

    Fact: I have not invested over a billion dollars of my own money into cleantech. It is substantially less, and a simple query to us would have corrected this error. We manage a balanced portfolio, and it has not “crashed” nor is it “dead”. In fact, our returns are significantly above the venture capital average.

    Fact: Contrary to your assertion, the U.S. Department of Energy (DOE) Loan Guarantee Program has created 55,000 new cleantech jobs. [1]

    Fact: The DOE loan program, despite your implications, has a 97% success rate. [2] The former program head, Jonathan Silver, expects it to make money, not be a subsidy.

    Fact: There is $51 billion remaining in DOE loan money.[3] The amounts in the CBS report are far from “spent” or allocated. You seem to want to cite big numbers, whether they are true or not!

    Fact: A substantial portion of DOE loans is allocated to nuclear energy[4], not just cleantech segments like biofuels, solar or wind, a fact conveniently left out despite your being aware of it.

    Fact: The U.S. spent $502 billion subsidizing fossil fuels in 2011. This is the result of directly lowered prices, tax breaks and failing to properly price carbon’s negative externalities.[5] You ignored the fact that energy is far from being a level playing field. Many other subsidies are hard to account for like MLP partnerships, accelerated depreciation and below-market royalties that are never categorized as fossil fuel subsidies that disadvantage cleantech.

    Fact: According to a senior U.S. Navy official, last year alone, $80 billion of taxpayer money was spent patrolling just the oil sea-lanes in the Arabian Gulf. There are many sea-lanes we patrol. Globally and over time, the U.S. has spent $7 trillion patrolling them.[6] Such “protection spending” of U.S. taxpayer dollars for the oil industry is a much larger subsidy than any amount spent to support the cleantech industry, a fact CBS chose to overlook despite my statements on camera. This may be the largest U.S. subsidy in history, and it was purposely ignored because it is inconsistent with your agenda. Cleantech subsidies are a miniscule fraction of one-percent of these amounts.

    The Department of Energy said it themselves, “Simply put, 60 Minutes is flat wrong on the facts. The clean energy economy in America is real, and we are increasingly competitive in this rapidly expanding global industry. This is a race we can, must and will win.”

    There were many opportunities for you to showcase cleantech successes such as the dynamic glass company, View, with whom you met and visited as part of your research. You also had knowledge that View raised $60 million in private funding in early 2013, and weeks before your program aired, View secured an additional $100 million in private funding. These dollars will go toward ramping production efforts in its Mississippi-based manufacturing facility, which will in turn create scores of new American jobs. Sustainable energy is the way forward for this new era of American manufacturing.  Already, the Brookings Institute reports that the clean economy employs over 2.7 million workers despite your implications to the contrary!

    You chose to ignore other success stories like energy storage company, Lightsail, which we also shared with you. In fact, you did not even want to visit the solar, engines or agriculture success stories, among others. You chose to ignore these FACTS, because it did not jive with the story you wanted to tell. Is your job reporting all the facts or merely pushing “angles”?

    You fundamentally do not understand how innovation works with platitudes like, “for every 10 startups, nine go under”.  At Khosla Ventures, we invest in companies that have high failure probabilities, but the wins far outweigh the losses. I clearly explained that we expect 50-percent of our portfolio companies to make money and today, our overall cleantech portfolio is profitable; however, CBS chose to air sources who have never looked at the details of a quality venture portfolio. In fact, their so-called experts are only expert pontificators who have never produced any biofuels themselves.  One always can find a “source “ to throw mud at anything to get on-air; CBS appears to want the same standards for sourcing as the National Enquirer.

    You falsely implied that our companies have received disproportionate taxpayer money, despite my repeatedly telling you otherwise. While these numbers are hard to accurately calculate, to the best of our knowledge, a substantial amount of funding (greater than 90%) for our cleantech portfolio has come from private sources. When our companies have received funding from the DOE, the dollar amounts represent a small fraction of the investment from private dollars. It is naive to believe that we can subsidize energy on a large scale; this kind of thinking would bankrupt any government, and yet CBS seems to imply that all our investments are based substantially on taxpayer money or are dependent on ongoing subsidies, a statement that is simply untrue.

    In fact, the former head of the DOE loan program, Jonathan Silver, stated publicly that some of the projects cited as failures by CBS never even got loans in the first place. You also failed to note that while Range Fuels took federal loan money, we strongly opposed their decision to do so. Because these are independent companies, we seldom control these decisions. Repeatedly, your story reinforced the 60 Minutes thesis rather than objectively reporting the facts.

    According to Silver, the DOE loan program was actually designed to make a profit in the long term even taking into account the failures, which represent a remarkably small portion of the portfolio (less than three percent). Any loan program, private or public, has both losses and gains. When the investment cycle is complete, Silver expects the government will actually make a profit on the portfolio. Interests are below market (just as in the oil leases that oil companies receive) but the terms are restrictive enough that our portfolio companies, Kior and Stion (our solar company) and others refused the loans even after they were awarded. CBS also failed to distinguish between federal loans that were designed to be profitable (the bulk of the money), research grants (billions spent on private universities and companies in and outside cleantech), work-for-hire (do we list Lockheed Martin, which receives billions of dollars annually in work-for-hire government revenue, as a subsidy?) and other programs.

    You misleadingly hyped the “$150 billion” allocated to cleantech without noting that, while it has been allocated, much of it has not been spent. Further, to the best of my knowledge, much of such project spending goes to larger incumbents, not entrepreneurs.

    Your naïve reporting also failed to account for the other setbacks we have gone through in the last five years, such as the economic crisis, which, while unrelated to cleantech, has substantially hurt the ability to fund cleantech research or projects. Many projects — be they chemical, oil sands or cleantech — have failed to meet their expectations because of the recent financial crisis.

    At scale, new technologies must compete with conventional fossil fuels on both price and performance – in the U.S., as well as in India and China. Energy incumbents have incredible advantages embedded in our tax code, government regulation and public infrastructure; therefore, new competitive efforts must be nourished and encouraged to maintain a more competitive environment and a level playing field. Subsidies should be used to introduce new competition to markets against the embedded advantages granted to incumbents. We must reform America’s energy policy before companies become dependent on the existing subsidy regime. As context, Chinese solar, wind, LED and other companies get substantially larger government loans to compete against U.S. producers, even without technology differentiation. In fact, we risk losing technology to China because there is simply more government support there. U.S manufacturing suffers as a result. The 1950s and 60s saw the moon race. Today, we are in a new race for sustainable energy, but we risk losing because of irresponsible reporting like that of CBS!

    Khosla Ventures does not believe in subsidy-dependent markets. Reaching unsubsidized market competitiveness five to seven years after a commercial start is an abiding principle for all of our investments. Subsidies are a crutch: they force innovation into a niche and create dependence on financial incentives that will eventually disappear. I have publicly stated that I am against corn ethanol and wind subsidies, among others, and in favor of reducing solar and biofuel subsidies over time. I also have written about the criteria for good subsidy programs elsewhere. We need to level the playing field in order to create new competition for fossil energy. Currently, there is an unfair advantage for fossil fuels with favorable tax legislation like Master Limited Partnerships, accelerated depreciation and below market royalties, and of course the aforementioned IMF-calculated subsidies as well as free transportation protection services provided by the federal government. It all adds up to massive numbers, much larger than for cleantech, and it has been going on for decades!

    New industries are created by entrepreneurs who don’t necessarily have subject matter expertise when they get started, yet they are still responsible for most of the innovation we see in society. Did Google know much about media? Or Amazon about commerce? Tesla about cars? SpaceX about rockets?  EBay about classifieds? Juniper about telecommunications? What did I know about computing when I started Sun Microsystems? We should celebrate these entrepreneurs, not pillory them for fighting entrenched incumbent industries that have political influence and money. And yes, they often fail, but they also create more positive change than incumbents who, in general, are only responsible for incremental improvements. The oil industry has probably spent more money advertising their environmental efforts with the likes of CBS than on real research in green technologies.

    Your so-called “experts” pontificate about the hard problem of energy; we heard similar things about the difficulty of telecommunications with trillions invested in infrastructure. Then, the Internet came along, despite the indifference of every major telecommunications carrier, and upended the industry. Looking back through history, we can easily find common shortsighted attitudes when evaluating new technologies. When Alexander Graham Bell invented the telephone, it was dismissed out-of-hand by the incumbent telegram service, Western Union. “The idea is idiotic on the face of it…. we do not see that this device will be ever capable of sending recognizable speech over a distance of several miles.”  Venture capitalist, Ben Horowitz, describes this naysaying attitude in an article titled, “Can-Do vs. Can’t-Do Culture”. As he so aptly points out about the naysayers, “They focused on what the technology could not do at the time rather than what it could do and might be able to do in the future.” This cynicism is exactly what CBS has proliferated in its unbalanced and unfair coverage of the cleantech industry. Today, the stakes are higher than ever as the world’s population increases and resources are limited. Our can-do attitude must overcome the naysayers.

    To get to the energy-independent future we need, we must continue to try and sometimes fail, but the consequence for not trying is guaranteed failure. We will keep accepting intelligent and selective failure. Even oil prospecting has a greater than 55-percent failure rate, and yet we still do it. In the venture industry, we make risky bets all the time because that’s what it takes to innovate.

    The future will run on energy. At Khosla Ventures, we are focused on making big bets to ensure a sustainable future even if some of them fail. It is unfortunate that stories like yours employ Benghazi-style reporting standards that overshadow the truth. I will continue to try and make the future happen and, when it does, hopefully someone else will do a better job reporting it.

    As Robert F. Kennedy said, “Only those who dare to fail greatly can ever achieve greatly.”

    — Vinod Khosla

    Read the abridged version of this letter here

    [1] Source: U.S. Department of Energy

    [2] Source: U.S. House of Representatives Committee on Oversight and Reform

    [3] Source: U.S. Government Accountability Office

    [4] Source: Brookings Institute

    [5] Source: 2013 International Monetary Fund Report

    [6] Source: Princeton University economic geographer, Roger Stern; Time Magazine


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    Outlook Business / Make a great company and the money takes care of itself Sun, 08 Dec 2013 06:28:34 +0000 This article was originally published by Outlook Business.

    He’s outspoken, irreverent and completely unapologetic. And Silicon Valley can’t get enough of him. Entrepreneur-turned-venture capitalist Vinod Khosla is known as much for his often-controversial views on just about everything as he is for his fervent championing of socially relevant innovation, especially in cleantech, healthcare and education. Khosla Ventures, the company the 58-year-old founded in 2004 with family funds, currently has a portfolio of approximately 50 companies in the sustainability space, and nearly 70 in the infotech space, from wearable computing and social media to payment solutions and enterprise and cloud. In a freewheeling conversation, Khosla discusses entrepreneurship, innovation and the culture in Silicon Valley. Excerpts:

    How has the Valley changed since you came here?

    The biggest change is that the culture of experimentation has become very accepted. In fact, if someone has been at a big company such as Hewlett-Packard or Cisco for very long, we consider that a negative. Nobody wants to hire somebody who has worked with big companies. Here, it’s all about trying new things. Failure has become a badge of honor. Generally, people are afraid to fail. Here, people are afraid not to try new things and, usually, if you try things that are hard, you will fail. There was a small fringe of this culture 30 years ago. Today, it’s maintstream.

    So everyone wants to be an entrepreneur?

    If you look at the best students from Stanford, I don’t think any of them wants to work at Cisco or IBM anymore. Why would you? There’s so much else going on. In the old days, people wanted to participate in the past by working for successful companies. Today, they want to invent the future they want. They think, “This is what the world should be and I will go out and change it.” And everybody — male, female, any age — is trying to do this.

    I tell my investors to look at the positive side: you can only lose 1 times your money and you can only lose once.

    Silicon Valley is now a state of mind. It’s not just a place anymore, it’s become a culture that other places are experimenting to replicate. I see bits and pieces of it in India. My favourite example is of a young entrepreneur called Vivek Ravisankar. He grew up in India, went to a second-tier engineering college in India — not one of the IITs. And he was frustrated that even if he was the best programmer, people would assign value to the IITs. He started this company — InterviewStreet — that tested people like him on the same scale as people from the IITs and if they were better, it showed. He’s now moved here and he told me yesterday that he’s going to do this for the rest of his life. That [entrepreneurship] as a lifestyle versus the bureaucracy of getting an MBA, working in a company, getting a promotion every couple of years.. that’s the culture difference in Silicon Valley. And what started as a seed here has been exported as a culture and become a global phenomenon.

    How does that influence investing?

    There are multiple types of investing. Wall Street investing is a bunch of greedy people who bounce between the walls of greed and fear. I don’t even think we’re in that business. This is risk-taking investing — when you invest, the chances are you will lose your money first and that’s the best of 50/50. When I talk to investors, I tell them, you have to treat the world differently. Look at the positive side: you can only lose 1 times your money and you can only lose once. If you invested $1 million, you can only lose $1 million. If you assume on day one that you’ve lost it, then everything is upside. So, play for the big upside.

    Isn’t that too simple an approach?

    Most investors spend most of their time trying not to lose money and then spend some time trying to make money. I don’t mind losing at all, but if I succeed, it had better be a big success. I don’t care if I get twice my money — that’s not interesting. I want to either lose my money or make 10 times my money. The math there works, but it takes a lot more guts and lot more conviction.

    Also, if you invest in what everyone else is investing, you’re going to get a normal rate of return. If you do things nobody else is doing, then you can get either zero or very high returns. It depends on how good you are. You can invest with the herd and get normalised return, which is how hedge funds are measured, or you can do it the way we do, where you can test how good you are all the time. I’ve never calculated IRR when I’ve made an investment. People might call that odd for an investor but I’m not really investing. I just try and help great entrepreneurs make great companies. And if I do, the money takes care of itself. The returns, someone else can calculate.

    What explains your interest in healthcare and cleantech?

    I am interested in anything where technology can disrupt economics. Business is about economics but technology is about new ways of doing things and I am interested in the intersection where a new technology completely disrupts economics in a business. Google made the economics of information free, to lots of people’s regret. Intel made IBM’s mainframes much cheaper. That’s disruptive.

    It’s about how technology affects real life, real business, real products, real utility. I think the same is possible in healthcare. You can dramatically reduce the cost of healthcare while improving the quality. Every mobile phone in India should have a doctor built in. It would probably be better than the doctor you would have access to if you went to the next village or the next small town. That’s a problem that can be solved through technology.

    Many companies in the US are working on healthcare innovation. Do you see the potential for them to go to India as well? What about your portfolio companies?

    Absolutely. It will be much easier to do healthcare innovation in India. If you cut the cost of healthcare in half in this country, you will be cutting the revenue of some company in half. In India, you’re creating an opportunity because most people don’t have access to healthcare; so it’s all upside. Here, cost cutting is downside for some business. Companies in our portfolio going to India? Almost everything we do is global. I don’t view any business as local.

    You have spoken frequently of embracing failure, your website has a quote on failure by Michael Jordan…

    I have never met anyone who has failed more than me. But think about it another way, I’ve never met someone who’s tried as many things as me. The odd thing is people mostly remember my successes, but there were many more failures than successes. I’m a true believer in failure, of failing intelligently, which is about experimentation that can lead to large successes. It’s very counter-culture, especially in a country like India where people are afraid to talk about their failures.

    I’m not. I love talking about my failures. Honest to God, there are so many I could talk for four hours. But I always talk of the lessons I learnt from each. I know what I know because I learnt from what went wrong. Every time something goes wrong, I do lots of analysis of what I did stupid. When something goes right, you don’t do analysis. You think, hey, I’m so smart. Smart people when they fail, they analyse and hopefully they’re smart enough not to repeat those mistakes.

    Very often, people so want to not fail that they don’t try. Those people had zero probability of achieving their goal because they didn’t even try. I would rather try and fail than fail to try.

    What do you count as your most stand-out failure?

    That depends on how you measure failure. If you ask me when did I lose a lot of money, we lost a lot in a company called Range Fuel. But to me, it was a very smart bet. We were developing four technologies to do the same thing [create biofuel] in parallel. The KiOR technology worked and so we said, “Why would we invest in the 2nd or 3rd best technology; we already own the best technology, so let’s stop funding the alternatives.” It was a race and we knew when we started that only one would win. But it was hard to tell which would work and we lost a lot of money because we kept investing until it was clear one was going to win.

    Where did things go wrong?

    Range Fuel was a logical, almost planned failure. The ones I regret the most are the ones that could have been big, the ones that failed to achieve their potential. And there have been quite a few of them. Sometimes they failed because I didn’t pay enough attention, sometimes they did the wrong thing or we didn’t bring the right team on board, and sometimes I gave the wrong advice. But all those are a necessary part of operating in uncertainty.

    How would you describe your investment philosophy? What do you look for in companies and entrepreneurs?

    I never call myself an investor. I say my job is to be an assistant to entrepreneurs. I’m a venture assistant — in the last 30 years I’ve never once called myself a venture capitalist or investor. My job is to be the assistant, mentor and coach to people trying to build great companies and if we do that successfully, the money takes care of itself.

    We never invest — no matter how much money we are likely to make — in things we are not proud to be associated with. So you’ll never see us invest in dirty technologies or in gambling start-ups. We just don’t invest in things that we don’t like. I don’t deal with anything I don’t want to deal with. I know it’s a luxury, an indulgence and a privilege and I treat it like that.

    Range Fuel was a logical failure. The ones I regret are those that could have been big, the ones that failed to achieve their potential

    We take bets that have high probability of failure but also high probability of success. They are across lots of industries but with one common factor: they’re all technology-based innovations. And the innovation is designed to either create a new product or service or to completely disrupt the economics of the existing products. And that can happen only through technology. If you’re not going to invent something, you’re not going to achieve those goals.

    But are there that many ideas to invest in?

    There just aren’t enough people comfortable thinking out of the box, who have the courage to try new things. Lots of people can tell you how things should be done but they won’t step out and do it themselves. I have no patience for pundits. I love do-ers.

    Vivek of InterviewStreet is my favourite kind of entrepreneur. He’s energetic, has lots of opinions and he’s willing to take risks. He listens to what I say only about a third of the time; the rest of the time he does what he wants. And that’s how it should be. He spends almost 80 hours a week on one thing. I spend one hour a week. I can’t know more than him about his business. But it doesn’t matter to him that I have more experience or that I am older than him.

    Is that a good thing?

    You don’t want entrepreneurs to do what you tell them to do. You want them to think, take your opinion, question and even challenge it. I like people who have that kind of guts and chutzpah.

    Gurjeet Singh of Ayasdi is the same way. He was a PhD student in mathematics at Stanford. As it is, you don’t find too many sardars in Stanford, studying mathematics, but this guy is absolutely brilliant. He with two professors came up with this whole new mathematical technique. We’ve been funding him — data science is one of the hot new areas and Ayasdi is one of the most interesting companies in data science. We are helping them take this brilliant mathematical idea into drug research for breast cancer, new sources of oil and gas… all kinds of breakthroughs using mathematical models.

    How involved are you in companies that you invest?

    In the areas I care about, I’m very involved. But strategically. What they should do, who they should hire, what kinds of technical breakthroughs, what products to build… Most of my time, I’m either a product manager or I’m a recruiter. I never look at spreadsheets or IRRs — they are uninteresting. I do care about what a company’s product looks like, what its logo looks like, who is the chief architect. I interview individual engineers all the time.

    What do you see as the most promising areas for innovation in the coming years?

    Maybe I’m just naïve, but I have found, no matter which area I look at, I can come up with some technology innovation that is disruptive. So, I can find room for innovation in almost everything I look at. We have a factory that produces a new kind of glass — it switches from clear to dark automatically. Think of the saving in blinds, air conditioning… Who would have thought you could make a new kind of glass? We’re making new kinds of meat, better hamburgers. We’re innovating in agriculture, in candy. Square is possibly the most popular payment system but everybody told me it would take 10-15 years when we did it. We’re doing farm work; in New Zealand we have a rocket launching company.

    It’s Halloween today, and imagine candy with half the sugar. Or imagine a device on your watch that could measure your blood sugar. That’s a real breakthrough. One, it’s a really valuable contribution and two, you’ll make a lot of money. Those are really interesting problems, to solve the education problem, the healthcare problem or the energy problem. You could make a lot of money and make a difference.

    Do you worry about potential bubbles in any specific area?

    Bubbles always happen. Investors are either in greed mode or fear mode. And there’s a follow the herd instinct. So, when you have a positive cycle, everybody jumps on board and there’s a bubble. Then everybody starts to lose and jumps off the train, so you have a depression. Everybody talks of the dotcom bubble. I call that the niche reality of a few people. If you care about Wall Street and stock prices, yeah, that was a bubble. If you care about reality, what did the dotcom bubble mean to most people? How much internet did they use? I challenge you to look at the graph of internet traffic and tell me where the bubble was. If real people were using the internet more and more every year, and there was no dip as you saw in stock prices, then what is real — actual usage or stock prices? Stock prices are a series of perceptions that have nothing to do with reality. I don’t care about that. I look at stock prices once a month. I don’t read research reports. I just worry about the reality of building great products, having technology breakthroughs, working with great people and making fun things happen. Candy can be really fun.

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    TiE / New trends and opportunities for entrepreneurs Sun, 08 Dec 2013 05:26:04 +0000 In this video, Vinod Khosla discusses new trends and opportunities and shares his advice for entrepreneurs to build disruptive and scalable businesses.  



    New Trends and Opportunities for Entrepreneurs with Vinod Khosla

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    Transforming cultures Wed, 22 May 2013 03:49:08 +0000 In this video, hear from Debra Chrapaty, CEO of Nirvanix and Amit Soman, COO of EcoMotors as they discuss how the culture of a company contributes to its success. 



    Transforming Cultures: Debra Chrapaty, Nirvanix and Amit Soman, EcoMotors

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    Startup wisdom: What I wish I knew Tue, 21 May 2013 04:07:22 +0000 In this video, hear from author, entrepreneur and professor at Stanford University, Steve Blank, as he talks about heuristics and lessons learned from his 21 years of experience at eight startups.  



    Startup Wisdom

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    The story of Veritas Tue, 21 May 2013 04:01:21 +0000 In this video, hear from entrepreneur, Mark Leslie, as he discusses some of the things he learned about leadership and being a CEO as he guided Veritas from a startup to a Fortune 1000 company over a period of 11 years.



    The Story of Veritas

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    Fireside chat with Aaron Levie, founder and CEO of Box Tue, 21 May 2013 03:25:31 +0000 Fireside chat with Aaron Levie, founder/CEO of Box and Keith Rabois, investment partner at Khosla Ventures.



    Fireside Chat with Keith Rabois and Aaron Levie

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    The creative destruction of medicine Tue, 21 May 2013 03:18:30 +0000 In this video, hear Eric Topol, MD, chief academic officer of Scripps Health, talk about the creative destruction of medicine.  



    Creative destruction of medicine

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    Survival to success: If/then scenario planning Tue, 21 May 2013 03:12:59 +0000 In this panel moderated by KV investment partner, Andrew Chung, hear from Jennifer Holmgren, CEO of LanzaTech, Chet Ferris, president and CEO of Stion and Don Runkle from EcoMotors as they discuss if/then scenario planning and how a startup can manage its spend to achieve success. 



    Survival to success: If/then to a goal

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    New solutions to age old problems Tue, 21 May 2013 02:56:11 +0000 In this video, hear from Jay Kimmelman, the co-founder and CEO of Bridge International Academies as he discusses how to disrupt the status quo in education. 



    New Solutions: Jay Kimmelman Co-Founder and CEO of Bridge International Academies

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    The answers to all your questions (in under 20 minutes) Tue, 21 May 2013 02:51:29 +0000 In this video, hear from David Sacks, the founder and CEO of Yammer, as he answers all of your questions in under 20 minutes including:

    • What does it take for a startup to succeed?
    • Why is distribution so hard?
    • Should I hire a sales team?  And how?
    • (When) should I listen to my sales team?
    • What was in the water at PayPal?



    New Sales Models: David Sacks, Founder and CEO of Yammer

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    LightFair / The device that used to be a lamp! Thu, 02 May 2013 04:37:17 +0000 In this video, hear from Vinod Khosla as he compares LED lighting technology to the invention and adoption of smartphone technology and gives a look into the future with Soraa’s GaN on Gan LED technology.



    LightFair 2013 Keynote

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    Carnegie Mellon Innovators Forum / Innovation and entrepreneurship Fri, 26 Apr 2013 04:29:13 +0000 In this video, hear from Vinod Khosla in a moderated discussion with Carnegie Mellon University provost, Mark Kamlet. 



    The Innovators Forum: Vinod Khosla

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    DEMO / Riding industry shifts Wed, 24 Apr 2013 06:17:33 +0000 In this talk, Vinod Khosla discusses how to identify and profit from industry shifts instead of getting left behind.



    Vinod Khosla on riding industry shifts

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    The Sacramento Bee / Investment needed in new low-carbon fuel Mon, 18 Mar 2013 04:12:23 +0000

    This article also appears in The Sacramento Bee.  

    Large oil companies like to tell the public “We Agree” when it comes to clean energy.

    But in Sacramento and Washington, their motto seems to be “It Can’t Be Done.”

    A Jan. 31 article in the San Jose Mercury News,“Chevron and its allies take aim at California’s low carbon fuel standard,” demonstrates how the oil industry has once again banded together to oppose groundbreaking environmental initiatives.

    Passed by Gov. Arnold Schwarzenegger in 2007, the LCFS seeks to lower the carbon intensity oftransportation fuels like diesel and gasoline by at least 10 percent by 2020. The program encourages innovation while penalizing poor excuses for “renewable fuel” such as corn ethanol, which have been supported by politically driven subsidies, are unsustainable and have little environmental benefit. The size of California’s market ensures that this gradual transition will have little short-term economic impact, while kick-starting clean alternatives.

    Oil companies would have you believe that the goals of the fuel standard are either impossible or obscenely expensive. Since the LCFS was first passed in 2008, the oil industry has spent millions of dollars trying to convince legislators and the public that low-carbon alternatives don’t exist or that they can’t be produced in large enough volumes to meaningfully reduce demand for traditional fuels or that corn ethanol is the only biofuel technology around. This is one of the biggest myths perpetrated by oil companies.

    Economically viable and far superior alternatives do exist. For example, KiOR, one of the companies in the Khosla Ventures portfolio, will produce a drop-in replacement for gasoline from wood chips or nonfood crops like switchgrass that grow on marginal land. KiOR’s technology at scale competes with conventional gasoline while reducing “well-to-wheel” greenhouse gas emissions by 63 percent to 80 percent. KiOR, ironically, could help the oil companies substantially reduce the financial and environmental risks they face.

    The old stalwarts are trying to extract oil from underneath polar ice caps or extract it from tar sands, and they use obstructionist initiatives to scare away third-party capital from burgeoning newer and cleaner technologies.

    KiOR’s first two refinery sites are located near shuttered paper mills.

    Think of the positive impact of replacing more of the hundreds of shutdown paper mills in this country with refineries producing clean fuels, creating jobs and restoring devastated communities. Regardless of these advantages, which KiOR and other renewable fuel companies have already demonstrated, the oil companies and their allies continue to spend tens of billions of dollars on much riskier, longer-term and dirtier bets, developing new oil fields while spending next to nothing on scaling lower-risk, low-carbon intensity fuels.

    The lack of support for clean renewable biofuels in the financial markets is exacerbated by doubt injected by the oil industry’s efforts to cancel or dramatically roll back clean air standards, scaring off investment in commercializing these production-ready technologies. In the end, scaling any new technology takes capital, and securing capital requires some industry support.

    This lack of leadership and outright obstruction discourages the rest of the investor community from taking necessary risk, a risk that’s much lower than offshore oil exploration where the failure rate can be 75 percent or more, since the industry’s determined opposition adds uncertainty to the commercial success of renewables in spite of their readiness to scale.

    California has an opportunity to show the rest of the nation and the world why it is known as the leader in environmental standards and why we should embrace instead of fight the LCFS. If the major oil companies and investors invested 2 percent of the $140 billion they spend on exploration and production in North America on alternatives, such as KiOR, they would meet the 2022 targets for low carbon fuel while achieving very attractive investment returns.

    Yet few in the oil industry have bothered to visit the first refinery built in the United States in 35-plus years, creating hundreds of jobs and producing 100 percent renewable oil with up to an 80 percent carbon reduction gasoline and diesel. This is a fuel with such a low carbon footprint that it would result in lower life cycle carbon emissions when consumed in today’s vehicles than electric cars would in most of the country.

    Meanwhile, the oil companies continue to complain eloquently about the red herring of corn ethanol. They engage in scaremongering about food vs. fuel when the same hydrocarbon fuel can be produced at a fraction of the cost of today’s corn ethanol using sustainable nonfood-based biomass, reducing the need for corn ethanol production and producing a superior-quality low-carbon intensity fuel.

    Advanced biofuels technologies are ready to meet the demand as soon as the capital is available. 

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    TechCrunch / Venture assistance: A philosophical view of what boards should and should not do Wed, 27 Feb 2013 07:38:27 +0000 This post also appears on TechCrunch.

    Most VCs pitch their venture firms as value added to a company’s entrepreneurial founders. Personally, I think leading VC firms do a pretty good job of being supportive of their companies, and most entrepreneurs funded by good funds like their investors. But, on the question of “value added,” most venture capitalists, even among the leading firms, are pretty passive and ineffective when it comes to assisting companies. In my view, many if not most of them haven’t done enough in their careers to earn the right to advise entrepreneurs, a job I consider laden with responsibility.

    A lot of VCs, especially those from the more financially oriented firms, do more harm to startups than good when they get themselves on company boards without ever having built a company themselves, or seeing one from the inside. What value can a VC as board member add to a company? We constantly ask our young guys (who are monitored pretty closely if they go on a board and are in learning versus advising mode and mostly are at Khosla Ventures for three years before they go out and be entrepreneurs themselves) is “What have you done to earn the right to advise entrepreneurs?” I don’t want entrepreneurs to get inexperienced advice on important matters.

    Our belief in bringing the best resources to our companies is why we’re very excited about the newest addition to the Khosla Ventures team: Keith Rabois. While recruiting him to join us, what I kept asking myself wasn’t whether he’d be a great investor (which he is), but rather whether he’d be sought out by entrepreneurs as a mentor, advisor, and board member. Almost all our reference-checking was done with entrepreneurs (successful and aspiring, seasoned and first-timers), not other investors. The reference checks repeatedly elicited feedback like “He asks the toughest questions”; “He pushes me the most and makes me think”; “He’s always there when I need help”; “Most valuable among all my board members and advisors”; “Doesn’t just tell me what I want to hear”; “Can imagine the future”; “Helps with recruiting”; and on and on.

    As an entrepreneur and operator at PayPal, LinkedIn, Slide, Square, and other places, and as a mentor to many startups over the years, Keith has earned the right to advise entrepreneurs. He knows, through PayPal and Square, what growth looks and feels like, and he knows what entrepreneurial struggles feel like through his experience at Slide. He knows how to advise entrepreneurs on hiring/firing, running teams, managing funding, when/how to control burn rate, and making other tough management decisions in the real environment of startups. He’s a practical hands-on kind of guy in growing companies, and he fits Khosla Ventures’ “venture assistance model” of people who have earned the right to advise entrepreneurs.

    That leads me to one of my favorite questions around younger entrepreneurial companies: What is the role of a board member?

    Good board members add many kinds of strategic value that’s critical to building a successful company, and they do it in multiple ways. Most of us don’t know what we don’t know when operating in a new area. The right advisor asks the questions you never knew were important. They serve as guides, helping you navigate the difficult road of building a company from the ground up, spotting things that an entrepreneur might otherwise miss (risks and opportunities alike). They carry with them an extensive network that they can bring to bear on all the different problems and challenges that might crop up along the way, whether it’s finding a critical hire with the perfect match of skills and experience or getting a company a make-or-break meeting with a decision-maker at a potential marquee customer.

    At Khosla Ventures, our “operating partners” are part of our philosophy of offering real targeted help, whether it’s teaching entrepreneurs how to build recruiting orgs that get the best talent or helping craft marketing strategies around new product launches. Good board members also bring different skills and points of view, developed though years of experiences (and failures). They force companies to address the toughest make-or-break issues before it’s too late, and they push entrepreneurs to greater heights than they might reach themselves. Having this kind of advisor as your coach is like turbo-charging your entrepreneurial engine from the sidelines.

    Entrepreneurs usually deal with many problems at the same time, and being a CEO is a very lonely job. They’re often so buried in the details, whether things are going great or poorly, that they fail to look up over the horizon. The job of a good board member and advisor (I use these terms interchangeably) is to help teams raise their heads and spot oncoming problems, scope out hidden opportunities, and get a broader perspective. If things are going great, anticipating problems is even more important since overconfidence can kill a company. Challenging the team to think about risks or position some long-term assets can make a big difference in helping an entrepreneur “create” a larger opportunity. Asking questions that an entrepreneur does not want to hear is an equally important role, and having advisors who’ve made mistakes before helps.

    I often talk about my lessons from years of screwing up. The value of diversity in a team and engineering the gene pool of a team to the risks and opportunities it faces are critical factors that good advisors can bring to a first-time entrepreneur. Understanding how to avoid needing to hire a CEO or what to do when you need to hire a CEO are all better informed by a wealth of previous mistakes. I often say I have a larger collection of personal mistakes than most people in the venture business.

    How do I measure my partners and myself? If with our advice, prodding and challenging, a team does not expand its opportunity by 2x or more, or if we have not pushed a team to recruit at higher levels than they would have without us or gotten unreachable candidates to consider the company (a company in my view becomes the people it hires), or if we have not helped a team grab opportunities (strategic or tactical big customers) or address risks earlier than they otherwise would have, then we have not added value. We have not done our job.

    Our goal isn’t to be the nicest among all investors, but rather to push teams to be as great as they can be, to help them see hard reality and the risks coming their way, and to press them to worry about burn rate or accelerate their spending depending upon the circumstances. By the same token, though we can push teams hard (sometimes other VCs will say we push them too much, but these are the passive VCs along for the ride), we are extremely loyal to companies and entrepreneurs who we are engaged with closely (in especially hard circumstances, more so than most VC firms).

    Even more critically, in almost three decades of being on boards and advising companies, I have never once voted against what a team wants to do, even when I strongly disagree with their choice. I will debate every issue hard and push my point of view but leave the final decision to the team. I don’t believe boards of entrepreneurial private companies should ever vote (except on the one issue of hiring and firing the CEO). If the team doesn’t believe in what the board voted on, then they won’t be successful at implementing it.

    The team that spends 80 hours a week working on a company, understanding all the nuances of the hundred things going on, and being responsible for implementing a decision, should make the decision (not the board that drops in casually every six or eight weeks). The more I believe a team is going the wrong way in their approach, the more I will bug them, push them, cajole them, and plead with them, but I always suggest I and other advisors/board members stop short of making the decision for the team.

    Decision-making should be a sharp line no board should cross. If a team knows the decision will be left to them, you get much more honest input and feedback, open discussion and vigorous (and sometimes uncomfortable) debate, better understanding of fears and opportunities, and more transparent self-assessments. I find many boards do the opposite by not engaging intimately with teams but still trying to vote on what companies should do. And occasionally, when I find I don’t have good chemistry with a team, I often bow out and let them go their own way and stop being active in the company. Not every relationship is fun and one has to acknowledge that. If a team does not want help, we don’t want to provide it.

    In contrast to this personal view of an ideal board, many boards are often polite and agreeable, in many cases to a fault. In one instance, a board I was on did not tell a company (which was well-financed and had $45 million in the bank) that they did not believe in the plan the team was pursuing. The board members were nice, friendly cheerleaders. I was almost isolated in my view. Three years later and after many wasted years of many lives, the company was sold for $3 million and the team was fired almost immediately after the acquisition. I swore I would not let this happen again and have since carried the statement “we prefer brutal honesty to hypocritical politeness” on our website.

    Instead of focusing on regular board “governance” (an activity I think is only minimally needed in good startups), I ask CEOs to focus on the most critical and pivotal risks, questions, and opportunities facing the company. Boards should challenge teams to be bigger, better, and more cautious or more ambitious as appropriate, almost to the limit (but no more) of an entrepreneur’s comfort and capability. They should make entrepreneurs think hard and critically. They should have the ability to understand a company’s business well enough to brainstorm strategy in a way the team not only respects but seeks out. I hope every one of my partners brings this to the boards they are on, and I hope entrepreneurs value this as much as I think they should.

    Some of the good entrepreneurs we talked to about Keith Rabois told us he was their toughest critic and their hardest questioner, and that made him even more attractive to us at Khosla Ventures. We want entrepreneurs to achieve all they can and avoid as many risks as possible. Good entrepreneurs should want activist, thoughtful, loyal, and experienced board members who are also respectful and deferential without being hypocritical nice guys. Incidentally, the less confident, more self-focused (rather than company mission-focused) an entrepreneur is, the more they prefer to be left alone.

    What else can a great board member like Keith bring to the party? Understanding a new space, having the imagination to imagine the possible, and guiding very lean startup-like experiments to move toward those goals while not assuming every strategy will work the first time. Most successful plans go through many twists, turns and evolutions, a fact seldom recognized by linear-thinking, “are you meeting your plan”-type of board members. Real experience working in startups sensitizes a board member to these realities of startup life. Good advisors have startup experience themselves.

    Good advisors have also done a lot of hiring and know what to look for. I have seen boards put together naïve, almost clinical hiring specs that look like something out of Business 101. Real life is much more complex, nuanced and flexible, and unless you have made enough mistakes in hiring (I assume I cannot do better than a 66 percent success rate in judging how good a hire will be), you don’t know how to advise a team in my view.

    Hiring may be the most critical thing a company does (if you believe as I do that a company “becomes the people they hire”) and experience in “success and failure factors” in recruiting as well as the “credibility to attract the unreachable candidates” becomes among the most important thing a company’s board contributes. I still spend more time recruiting for our companies (even down to individual critical engineers when needed) than any other single activity.

    Good advisors and board members help entrepreneurs avoid mistakes they might not see because they’re heads down focused on trying to build their business. Board members should serve as a trusted inner-circle of advisors that motivate company management to self-assess and improve, and good boards help founder CEOs scale by helping them build the right teams to support them. Sometimes companies need to spend time doing down-the-road planning and sometimes they need to focus on just getting stuff done for the next six months. Good boards know the difference, and they know what’s important when.

    At Khosla Ventures, we encourage our entrepreneurs to do regular 360 reviews, think about gene-pool engineering, do risk analysis, focus on measurable goal setting, conduct honest competitive analysis, execute RIFLE market analysis when needed, and, most importantly, do rigorous “If-then financial planning.” We call these processes our “standard operating procedures” and, once a quarter, decide for each company at our internal meeting which of these are most relevant to direct a team’s attention to.

    Good entrepreneurship is like having a delicate recipe cooked by an expert chef with ingredients added in the right amounts at the right time. The recipe for startup success is tough to intuit on your own without the help of good advisors. Those advisors don’t make decisions for management. Their only role is to assist entrepreneurs by giving honest advice, even when it’s uncomfortable to hear. They’re not there for governance, making decisions or casting votes. They’re there to listen, argue, debate and guide, but leave the final decision to the team that’s going to have to execute it. In the end, advisors should push and challenge without ever making a team feel like they cannot make the final calls or that a board member’s interests diverge from theirs.

    We never refer to ourselves as venture capitalists. We try to be “venture assistants.” Getting good advice is much more important than getting funding. It’s much easier to get money than get the right kind of advice. Making all of the judgment calls that running a startup entails is where having the right advisors really matters. There’s a delicate balancing act between technology, innovation, experience, burn rate, and many other factors that are seldom appreciated by people who have not built large, successful companies that started out small. And having the right kind of help to manage that balancing act creates step-function-type changes in a company’s trajectory. It’s the difference between building a hundred-million-dollar business and a billion-dollar business.

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    The Leonardo / Thoughts on Twitter, entrepreneurship and much more Tue, 08 Jan 2013 05:38:53 +0000 In this video interview, hear from Vinod Khosla as he discusses Twitter, entrepreneurship and many other topics. 



    Sessions @ The Leonardo with Vinod Khosla

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    Forbes / Technology will replace 80-percent of what doctors do Wed, 05 Dec 2012 04:42:27 +0000 This post was also published by Fortune

    Data-driven healthcare won’t replace physicians entirely, but it will help those receptive to technology perform their jobs better.

    Healthcare today is often really the “practice of medicine” rather than the “science of medicine.”

    Take fever as an example. For 150 years, doctors have routinely prescribed antipyretics like ibuprofen to help reduce fever. But in 2005, researchers at the University of Miami, Florida, ran a study of 82 intensive care patients. The patients were randomly assigned to receive antipyretics either if their temperature rose beyond 101.3°F (“standard treatment”) or only if their temperature reached 104°F. As the trial progressed, seven people getting the standard treatment died, while there was only one death in the group of patients allowed to have a higher fever. At this point, the trial was stopped because the team felt it would be unethical to allow any more patients to get the standard treatment.

    So when something as basic as fever reduction is a hallmark of the “practice of medicine” and hasn’t been challenged for 100+ years, we have to ask: What else might be practiced due to tradition rather than science?

    Today’s diagnoses are partially informed by patients’ medical histories and partially by symptoms (but patients are bad at communicating what’s really going on). They are mostly informed by advertising and the doctor’s half-remembered and potentially obsolete lessons from medical school (which are laden with cognitive biases, recency biases, and other human errors). Many times, if you ask three doctors to look at the same problem, you’ll get three different diagnoses and three different treatment plans.

    The net effect is patient outcomes that are inferior to and more expensive than what they should be. A Johns Hopkins study found that as many as 40,500 patients die in an ICU in the U.S. each year due to misdiagnosis, rivaling the number of deaths from breast cancer. Yet another study found that ‘system-related factors’, e.g. poor processes, teamwork, and communication, were involved in 65% of studied diagnostic error cases. ‘Cognitive factors’ were involved in 75%, with ‘premature closure’ (sticking with the initial diagnosis and ignoring reasonable alternatives) as the most common cause. These types of diagnostic errors also add to rising healthcare expenditures, costing $300,000 per malpractice claim.

    Healthcare should become more about data-driven deduction and less about trial-and-error. That’s hard to pull off without technology, because of the increasing amount of data and research available. Next-generation medicine will utilize more complex models of physiology, and more sensor data than a human MD could comprehend, to suggest personalized diagnosis. Thousands of baseline and multi-omic data points, more integrative history, and demeanor will inform each diagnosis. Ever-improving dialog manager systems will help make data capture and exploration from patients more accurate and comprehensive. Data science will be key to this. In the end, it will reduce costs, reduce physician workloads, and improve patient care.

    Replacing 80% of what doctors do?

    Much of what physicians do (checkups, testing, diagnosis, prescription, behavior modification, etc.) can be done better by sensors, passive and active data collection, and analytics. But, doctors aren’t supposed to just measure. They’re supposed to consume all that data, consider it in context of the latest medical findings and the patient’s history, and figure out if something’s wrong. Computers can take on much of that diagnosis and treatment and even do these functions better than the average doctor (while considering more options and making fewer errors). Most doctors couldn’t possibly read and digest all of the latest 5,000 research articles on heart disease. And, most of the average doctor’s medical knowledge is from when they were in medical school, while cognitive limitations prevent them from remembering the 10,000+ diseases humans can get.

    Computers are better at organizing and recalling complex information than a hotshot Harvard MD. They’re also better at integrating and balancing considerations of patient symptoms, history, demeanor, environmental factors, and population management guidelines than the average physician. Besides, 50% of MDs are below average! Computers also have much lower error rates. Shouldn’t we take advantage of that when it comes to our health?!

    Technology compensates for human deficiencies and amplifies our strengths – MDs and less-trained medical professionals can do more. Eventually, computers will replace 80% of what doctors do and amplify their capabilities. Lifecom showed in clinical trials that medical assistants using a diagnostic knowledge engine were 91% accurate without using labs, imaging, or exams. Another clinical study by the same company demonstrated that 75% of cases can be safely triaged to be treated by RNs, with the remainder handled by doctors. A MassGen study found that 25% of the time, a medical record for patients who wound up with ‘high risk diagnoses’ had ‘high information clinical findings’ before a physician finally made the diagnosis — in other words, there was a significant delay that might have been avoided had a clinical decision support system been used to parse the notes!

    New technologies will make the receptive doctors better at their jobs – quicker, more accurate, and more fact-based. There is a tremendous opportunity in the influx of data that has never before been available. Once we have a large enough dataset, and an addressable database of research studies, we’ll be able to identify patterns and physiological interactions in ways that weren’t possible before.

    Over time, doctors will increase their reliance on technology for triage, diagnosis, and decision-making. Eventually, we’ll need fewer doctors, and every patient will receive the best care. Diagnosis and treatment planning will be done by a computer, used in concert with empathetic support from medical personnel selected more for their caring personalities than for their diagnostic abilities. No brilliant diagnostician with bad manners, a la “Dr. House,” will be needed in direct patient contact. Instead, we’ll use “Dr. Algorithm” to provide the diagnosis, while the most humane humans provide the care.

    Systems will start as clumsy toddlers and develop to maturity and efficiency

    Don’t expect ace diagnosis systems overnight. They may start as seemingly minor point innovations or as clumsy-sounding systems not ready for prime time.

    Imagine using the AliveCor* iPhone case to take an ECG every day for less than $1/test. This device and others like it would capture a lot more information than the typical heart patient’s semiannual ECG check at the doctor’s office (it would also cost a lot less). What if you could send 500 “auto-diagnosed” ECGs to your doctor for less than it costs to get one ECG done in the hospital? Today, most heart disease is identified only after patients have heart attacks. But imagine having preventative cardiac care, enabled by machine-learning software that identifies abnormalities and predicts episodes. We could discover most heart disease before a heart attack or stroke and address it at a fraction of the cost of care that would be needed following such a trauma. But we need a decades-worth of data to be really good at it.

    Dermatology appointments could be handled by CellScope*, which produces low-cost iPhone attachments for imaging skin moles, rashes, ear infections, and (in the future) your retina or throat. Those images could be processed by algorithms to detect patterns that warrant closer inspection. A device like the Eyenetra* could give you an eye test and fit you for glasses at little cost or hassle. Adamant* is attempting to produce a chip that can identify hundreds of gases in your breath, which could be used to detect and even identify different types of lung cancer, all for far less than a big CT scanner that’ll just tell you that you have a nodule.* monitors your rate of emailing, tweeting, texting, and calling to gauge your social activity. By watching for changes in your behavior, it can tell how you’re doing far better than a psychiatrist.

    These point innovations will seem immaterial at first, but, when there are enough of them, they will integrate and start to feel like a revolution. The technologies of 2020 will be as different from today’s systems as the car floor-mounted, multi-pound cell phones with bulky handset cords of 1986 are from today’s iPhones!

    The human element will survive

    Some critics of more automated healthcare argue that medicine isn’t just about inputting symptoms and receiving a diagnosis; it’s about building relationships between providers and patients. Providing good bedside manner and answering certain questions can often be handled better by a person than a machine, but you generally don’t need a medical degree to do that. Nurses, nurse practitioners, social workers, and other less expensive, non-MD caregivers could do this just as well as doctors (if not better) and spend more time providing personal, compassionate care. I’m not advocating the removal of the human front-end here. I’m arguing that we should build robust back-end sensor technology and diagnostics through sophisticated machine learning and artificial intelligence operating on data in greater volumes than humans can handle.

    A transition to automation has already happened in other areas where we once thought human judgment was required. Most commercial flying is now done by auto-pilot, not by the captain. Algorithmic trading now drives most stock market volume. Google’s (GOOG) self-driving car has had zero accidents driving 300,000 miles on normal streets. The same replacement of human involvement by computers will also happen in healthcare. This will create a more comprehensive understanding of patients and improve health outcomes with more personalized treatment. Physicians will have MORE time to spend talking to their patients, making sure they understand, socializing care, and finding out the harder-to-measure pieces of information because they’ll spend a less time gathering data and referring to old notes. And, they will be able to handle many more patients, reducing costs.

    The source of healthcare innovation

    Where will all this innovation come from? Some believe we have to work within the constraints of the medical establishment. I disagree.

    Innovation seldom happens from the inside because existing incentives are usually set up to discourage disruption. Pharma companies push marginally different drugs instead of potentially better generic solutions because they want you to be a drug subscriber and generate recurring revenue for as long as possible. Medical device manufacturers don’t want to cannibalize sales of their expensive equipment by providing cheaper, more accessible monitoring devices. The traditional players will lobby/goad/pay/intimidate doctors and regulators to reject innovation. Expecting the medical establishment to do anything different is expecting them to reduce their own profits. Granted, these are generalizations and there are many great and ethical doctors and organizations.

    Fortunately, it doesn’t matter if the establishment tries to do this or not, because it will happen regardless. And it may start at the periphery, e.g. with the 40 million uninsured Americans or the hundreds of millions of people in India with no access. This shift in healthcare delivery will allow for less money to be spent on capital equipment, cutting costs. It will allow us to provide care and basic service to those who can’t afford it now. It will help avoid errors. And, it will prevent simple things from getting worse before being addressed.

    Entrepreneurs can come at these challenges and inject new insight. They can ask naïve questions that get at the heart of pervasive and sometimes unperceived assumptions. They can leverage the many insiders to provide real understanding of medicine at the right time. They can build smart computers to be objective cost minimizers while being care optimizers.

    This evolution will take time, but it won’t take as long as people think. The move will happen in fits and starts along different pathways, with many course corrections, steps backward, and mistakes. Maybe we’ll start seeing disruption at the fringes. Many naïve innovators, maybe even 90% of them, will attempt this change and fail. But, a few will succeed and change the system. For those of us who support entrepreneurs and companies that create this change, most investments will be lost, but more money will be made than lost through the few successes. None of us knows how this space will turn out, but there’s a huge opportunity for technologists, entrepreneurs, and other forward-thinkers to reduce healthcare expenditures and improve patient care at the very same time.

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    Forbes / The big green opportunity: Transforming clean tech into “main tech” Wed, 28 Nov 2012 07:00:48 +0000 This post also appears in Forbes.

    Clean tech as we see it continues to be a large opportunity – one that we believe will create significant impact and positive returns – despite what the pundits are saying. Clean tech as we see it continues to be a large opportunity – one that we believe will create significant impact and positive returns – despite what the pundits are saying.

    Worldwide, 500+ million affluent people enjoy an “energy and resource rich” lifestyle but five billion people are still striving for this prosperity. The only way to bridge this gap is innovation and increased resource efficiency.

    But the pundits in search of stories focus on the examples of a few well-highlighted but probably predictable failures, like Solyndra and A123, thus scaring off potential investors and, unfortunately, it appears that fewer good ideas are getting funded. This challenging environment calls for different strategies than have been taken in the past.

    It is possible that existing technology and business-as-usual will be able to handle the projected growth in demand for energy and resources, but they will do so only at an increasing cost. This would place a growing drag on the economy long term and would create increased systemic risk. Instead, we can invent and commercialize new technologies that provide far better alternatives to the current methods in these markets.

    Given the trends of business-as-usual, markets for truly economic sustainable technologies that impact our resource development or consumption will flourish in the long term. As we like to say, new technologies that meet the “Chindia Price” – the price at which China and India will adopt a technology without subsidies – by reaching unsubsidized market competitiveness and obeying the “laws of economic gravity,” will do well if they can survive until they scale. Survival of good technologies unfortunately will not always be assured.

    Focus on “main tech” creates large option value

    We believe the more mainstream (“main tech” or unsubsidized cost competitiveness in a broad array of mainstream energy businesses)

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    and less niche (“clean tech” or the subsidized carbon price dependent world) target markets for a technology, the better the economics and the less probable the dependence on regulation and subsidies.

    Agility, not religion, is often the key to a venture’s success and pivots in strategy are common for the successful ones. From the beginning, Khosla Ventures has had an investing strategy around main tech, not around the conventional interpretation of clean tech representing our philosophy of supporting a broader set of clean tech technologies that have main tech economics.

    This is a much more holistic view than how “clean tech” is conventionally interpreted in the press, which tends to think of it as just solar, wind, and electric vehicles.

    With our sustainability strategy, we invest in many different categories – utility-scale clean energy generation (solar thermal), distributed generation (rooftop solar or efficient power generation engines for buildings), mechanical efficiency (engines), electrical efficiency (LED lighting), batteries, biofuels, biochemicals and bioplastics, materials (glass that blocks light at the push of a button), and agriculture (reduced fertilizer use) and food (produced more efficiently). This diversity limits the effects of any one segment going out of fashion, reducing the risk of the entire portfolio.

    Being so widely diversified has insulated Khosla Ventures and other funds that have taken this approach, while traditional clean tech investors, who concentrated in solar, wind, or batteries alone, have generally not fared as well. With a little luck, we currently expect almost all of these categories to be individually profitable in our portfolio. Given our main tech focus the consequences of failure are losing one times our money, but the large markets make the option value of success very attractive in our view.

    The nature of disruption: A few win, place or show but most lose!

    Clean tech investing and its outlook have recently been marred by the publicity, politics and headlines around a few notable failures. When a new market emerges, be it solar cells, biofuels, engines, LEDs, networking, storage, search, mobile or anything else, technologists jump in and innovate.

    But for every 10 startups with new technology ideas, there are, at best, only a few winners. I like to say that in any new technology horserace, there are only a few that can win, place, or show for performance and cost effectiveness. The others, the majority, will likely perish or be acquired for residual value. The failures of Solyndra and A123 should be viewed in this light.

    Making mistakes and having some failures is par for the course when you’re backing new technologies. Making mistakes and having some failures is par for the course when you’re backing new technologies, some of which may be at the very early stages. We’ve made our own share of mistakes here, i.e. investing in corn ethanol technology that wasn’t advanced enough to be competitive (corn ethanol simply can’t reach the Chindia Price and was a big blind spot for many) but realized our mistake very early and stopped funding this area.

    As markets begin to form, all technologies look good, but by the mid-to-late stage, some become clearly uncompetitive. Most competitors will fail to win, but the winners will reap big rewards.

    Most ventures will lose money according to venture industry statistics, but more money will be made than lost. This is why venture funds can still have good returns even when most startups fail. At Khosla Ventures, we currently expect to do better than industry averages by keeping our losing companies to a minority. This isn’t surprising to those of us in the technology business. To be specific, Solyndra, Miasole, and other solar failures should be expected. A123’s technology was not a materially differentiated leap forward in automobiles or batteries, a fatal flaw for a newcomer trying to break into a market.

    There were many search engines early on, but now principally Google and Bing remain. Within our portfolio, we had both Range and Kior as part of our biofuels strategy. But as soon as it became clear to us that Range would not be able to compete with Kior and other technologies on fuel costs, we stopped investing in the Range technology and suggested to the board and management that they adopt fermentation instead of the catalysis approachthey had been taking – something they failed to do. Agility, not religion, is often the key to a venture’s success and pivots in strategy are common for the successful ones.

    Similarly, it was clear to us that solar cell technologies that were chasing First Solar (the incumbent) to get to 12–14% efficiency would not be able to compete against the leading non-silicon thin film photovoltaic technology. When we have invested in traditional categories like solar, we’ve chosen carefully. For example, we backed Ausra in solar thermal and sold it at the right time to the French nuclear giant Areva.

    In solar cells, we invested in Stion to compete with conventional silicon-based photovoltaic modules at 18–20% efficiency, instead of targeting First Solar and we still expect a good outcome despite the many failures in the thin film solar business. More recently, while most others have stopped investing in solar, as contrarians, we invested in two brand new solar cell startups. Disruption opportunities don’t stop just because Wall Street sentiment turns negative.

    Sometimes we are right in our assessments and sometimes we are dead wrong, but that is the life of a technology investor. Understanding that there will be some failures, we rely on small investments as risk reduction to judge where to make bigger investments and get larger returns, and even take a few home run swings where we tend to double down with full insider knowledge in private companies.

    We have to be disciplined and think about the long term, because our typical investment period is not one quarter (like on Wall Street), but typically five to seven years. So there is plenty of opportunity to be wrong, and success relies on supporting technologies and entrepreneurs with the potential to do big things through the challenges they might face along the way.

    The press and public markets, on the other hand, wrongly focus on the short term and the early failures and successes because they make visible stories. It takes discipline not to get distracted by short-term events like hot or cold stock markets in the sector, press stories on companies like Solyndra, and the rest of it.

    Performance to match any benchmark

    Since we started investing in clean tech and information technology…our returns have well exceeded typical venture funds. So how well has Khosla Ventures done? Though we don’t disclose returns, it is fair to say that, since we started investing in clean tech and information technology in 2006 with the current team, our returns have well exceeded typical venture funds, be they clean tech, information technology or biotechnology funds.

    Even if we calculate the returns just on our clean tech investments, we still exceed the performance of most more general venture funds, even in today’s depressed clean tech market, and produce attractive results for our limited partners.

    More importantly, when we raised a new fund (we only work with knowledgeable, sophisticated investors, almost exclusively institutions) we were oversubscribed during a tough time for the venture industry. I offer this, with apologies, as it is not meant to sound arrogant but rather to defend clean tech investing as a sector, as proof that clean tech investing can generate good returns for investors, contrary to the current misconception.

    Of course, past results are not indicators of future performance and luck and circumstances beyond investors’ control always play a large part in all investing. Some of the problem of perception (and we had our share of problems and upsides too) is the fact that there are many investors who follow the latest fad and chase excitement.

    Clean tech went through a time when it was in vogue and now it is not. We have seen similar fashions arise elsewhere, for example, in dot-com investing in the late 1990s (Google was born during the “bust”) and more recently in social/mobile startups. What is clear from such trends is that long-term value is created in nearly every important sector, but often in different places than most expect when a sector is at the height of fashion.

    The financing environment for clean tech companies is tough today, given the negative fashion sentiment, but good companies with highly differentiated technologies are getting funded. Each capital raise might be more of a grind and take longer than when clean tech was hot and fewer investors are interested in even looking.

    But Khosla Ventures has had 11 clean tech financings so far in 2012, each at an increasing valuation, and these financings have raised about $500 million in equity and substantially more in debt for our companies.

    We are much more ready to abandon or sell a technology in clean tech today if it fails to be highly differentiated because one has to anticipate a continuing negative clean tech funding environment that will limit the ability to raise equity financing for these companies in the future.

    But the aggregate results are still attractive and more importantly, contrarian investors who invest at today’s much lower valuations will reap the rewards if companies deliver on their promises.

    Sometimes one company missing its IPO forecast, as Amyris has done, can create buying opportunities in the sector. But one needs to be extremely cautious (“don’t try this at home” applies), as clean tech investing requires highly technical judgments about what might or might not work about a technology.

    We don’t mind investing in companies that have high failure probabilities but we like to see big wins if the technology succeeds. That’s why we focus on the best teams with differentiated technologies and the potential to be disruptive. We ignore the hype cycle, because short-term trends are not meaningful when it comes to venture returns.

    We will continue to place new bets in sustainability technologies along with our regular focus on information technologies. We will continue to invest small amounts of money when technology risk is high; as the risk declines, this creates an opportunity to make much larger investments.

    One has to anticipate a continuing negative clean tech funding environment (and a future up cycle is likely too) and keep in mind that this will limit the ability for these companies to raise equity financing in the future. Usually, the bulk of our investment in any given venture comes when the risk is lower and the technology path clearer (but still not always clear).

    There are times when we get excited about companies (sometimes warranted, sometimes not), but not taking risks seems like a sure way to lose in the technology business.

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    TEDxSF / Investing to expand global health Sun, 18 Nov 2012 05:53:32 +0000 In this video, Vinod Khosla discusses what healthcare might look like in 2025. 



    Vinod Khosla at TEDxSF (7 Billion Well)

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    TechCrunch / Signs it might be time to consider hiring a CEO Mon, 12 Nov 2012 04:55:44 +0000

    This post also appears on TechCrunch

    Editor’s note: This is Part II of a two-part guest column written by legendary Silicon Valley investor Vinod Khosla, the founder of Khosla Ventures. In Part I, he offered suggestions to help founders determine if, when, and how to avoid hiring a CEO. You can follow him on Twitter at @vkhosla.

    As a founder, there sometimes comes a point in your company’s growth trajectory when you need to hire a CEO or president from the outside to get to the next level. This can be an incredibly difficult decision to make, but it’s better for you to make the decision yourself than to be told by your board that they’re hiring one whether you like it or not. That situation is avoidable both by minimizing the chance the hire needs to be made, and also making sure communication lines with your board are wide open so you’re part of the process in picking a CEO complementary to you.

    Unfortunately, unreasonable founders sometimes get in the way of good execution, especially when a company gets large enough to need structured management. It’s not always possible to keep the founder as CEO, and the best indication of whether a company needs a new CEO usually comes from the management team. New team recruits may not want to join, old ones may indicate a desire to leave or get disengaged, and the whole team may approach a board requesting a change.

    The first stage of a company’s growth is one in which leadership generally happens in a “hub and spoke” style, where the leader/CEO/founder(s) is (are) at the center of most decisions and integration among functions happens mostly by the CEO. A CEO and his or her co-founders operate like a “kitchen cabinet” to make most decisions relatively informally and outside any normal process. This is often what I like to call the “feel” stage, or “make it up as you go along.” There are usually fewer than 30-40 employees, and many things are in flux as the collision of the founders’ vision and the real world is still working itself out.

    As a bit of a tangent – make note that the quality of the people you hired at this stage into nearly any role are critical to your future success. You want the gene pool to start A+; this will set up a positive cycle and draw more and more top people to your company. See our papers on Gene Pool Engineering and Recruiting, which dig further into this topic. If you cannot hire the A+ people, get someone who will attract them, because a company becomes the people it hires early in its life! Hiring the hirers of the future is a critical factor to future success.

    Stage two of a company’s growth requires more integration, coordination, and sharing of leadership with the team as they begin to work cross-functionally and define processes and shared metrics. This is generally the stage where you want to start surrounding yourself with more senior people – both those who know the space, as well as those who bring experience from analogous areas to help you disrupt it. Usually, it’s best to have a mix of these different backgrounds, working well in “managed conflict” or “organized chaos.” At this point, you have to ask yourself as a founder – can you do this CEO job? Do you need to do it? What really matters to you most? Do you really even want to do it or just think it’s “expected” by your colleagues, family, and friends? Would you rather focus on vision and let someone else handle the details? Soraa and Lanzatech are two examples of companies with founders that looked forward to bringing in CEOs at this stage.

    • Sean Simpson (founder of Lanzatech) is a brilliant scientist, full of ideas and vision, but he came to us with what could only be described as a bad pitch with some brilliant nuggets that we picked up on. We bet on his vision and he built an excellent research operation in New Zealand, but when it became time to scale, we mutually agreed to bring in a strong business-minded CEO who understands the space well.  We were fortunate enough to find Jennifer Holmgren from UOP, who has been an excellent partner for Sean and has helped the company get to the next level with several partnerships worldwide that would have been difficult for Sean to put together. In Sean’s view, “The ideal timing for recruiting a CEO is when the technology just begins to demonstrate commercial readiness, and thus the company is on the brink of securing commercial interest.”
    • Steve DenBaars and Shuji Nakamura (co-founders of Soraa) were luminaries in LEDs, and did a great job building the technical organization around their fundamentally differentiated GaN on GaN technology, but they lacked critical business and operations skills. Steve acknowledged that he wanted to do it all, but was involved in the CEO recruiting process from the beginning and came to understand the critical importance of having strong business and operations leaders on the team. Now the company is scaling production quickly, with a professional management team onboard. “One insight for founders to recognize is that hiring a CEO and seasoned management team greatly increases the odds of a successful transition from R&D to product and revenue generation,” Steve says.


    It’s worth taking a look at Noah Kagan’s blog post “Why I got fired from Facebook” for context on how excellent individual contributors (founders, but others as well), can end up being bad managers or even bad for an organization at a particular phase. There are different types of people in organizations and they have value at different phases.

    Stage three of growth occurs when your business requires more functional depth and more consistent, integrated execution. Business processes need to be more defined and predictable, and the CEO becomes more of an orchestrator to make sure that each leader is driving functional excellence and all the functions are integrated across the organization. This helps to meet overall goals in keeping with an agreed upon vision.

    As the company grows, you should ask yourself, what are you, as the founder, doing well and what don’t you have time for? Can you bring in a “hired gun”/partner to cover some of the time-consuming but less critical/less top-of-mind/less well-executed aspects of what you do? Maybe the right person will even help you stretch your vision. A good leader should strive to have 50 percent of their time free at the beginning of each week. This way, you can be proactive about where you want to lead instead of being reactive and buried when urgent events, emails, calls, and requests pop up. At some point, you may realize that you do not have the skills or experience to lead the organization on to its next stage of development, and/or it may be moving so fast that you don’t have the time (or often the interest) to develop them. This isn’t failure – it’s success!

    There comes a time in many startups’ lifecycles when bringing in an outside CEO or president is necessary and good.  They’ll bring vital management bandwidth, knowledge to respond to the unknown unknowns, and many other executionally important attributes to help make your vision a reality.  The hardest part is trying to hire before the need – don’t wait too long. This means understanding your challenges ahead and anticipating when they might be too much to handle alone.

    You should try and hire someone that shares your fundamental values about people and leadership but brings complementary skills. Don’t rush into a decision and don’t settle, but realize that your tendency may be to block any hire. Be proud that you’ve built enough value to attract a great CEO and build something even more valuable! Or, if you haven’t built enough value for whatever reason, give your shareholders a chance to recoup some value from their investments. There won’t always be consensus, because there are many hard judgment calls to make in this process, and everyone has different biases, goals, and aspirations. But the earlier you shore up the needs of your company, the less likely it is that the situation will become unpleasant for you. More likely, acting early will provide leverage and bandwidth.

    Steve Crane, CEO of LightSail Energy, offered a perspective that applies to an important subset of companies:

    The key transition point is when a start-up is getting ready to go to market with its first product, especially if that product is a substantial one. The company goes from being inwardly focused to being externally focused. Of course, it’s critical from the beginning to understand the market need in detail and to establish close ties with early customers. But, in my experience, everything changes when you start to ship. Completely new challenges show up all at once – customer support, scaling, managing a sales force. Most founders fail to proactively prepare for those challenges because they’re so consumed with the task of getting that first product out the door.

    Avoiding Common Pitfalls Of Management Transitions

    It is a common misconception that CEOs need to know the business or technical area in detail in order to be effective – this is most often not a requirement! An excellent leader with the right mindset and experience in related areas can often be better than a person with deep area expertise who “knows too much” and is overly attached to conventional wisdom vs. how things could be different.

    Some of these management hires don’t work out (I’d say roughly 30 percent) and some end up not working well with the founder while potentially doing well for the company. Save your “bullets” to admit a hiring mistake and effect a change if you or the board made a hiring mistake. As hard as they might be, the best decisions you can make are ones that benefit the company, and there may come a point when it’s time to leave your baby in others’ hands. To minimize the likelihood of this happening, it’s important for the board not to force a hire without the founder’s buy-in. They should at least be transparent and say they will do it despite a founder’s objections. Brutal honesty helps greatly in this situation, and the worst case happens when the board pushes a candidate and you hold back and don’t share your reservations.

    Also, hiring outside management shouldn’t be viewed as the first step in the founder’s exit. The best hired CEOs will still let the founder’s role and vision flourish while they help successfully execute it. Usually, founders are better at setting, iterating and evolving a vision, while the CEO/managers are good at helping an organization achieve the vision. As I said in Part I, a traditional manager becomes important when the critical questions are things that have been seen before, like: “How sales people work” or “What constitutes a good VP of sales?” or “What sales cycle or sales economics really are in an existing area?”

    Giving up the CEO role (or creating a president/COO role) is not easy, but it can be done gracefully so that you, as a founder, preserve your “silver bullets.” A productive transition can dramatically change the influence you have once you give up the job, and it will set the company and yourself up for long-term success.

    David Friedberg, CEO of Climate Corp., has an interesting perspective (not one I completely agree with) on when a founder should stay or go:

    A lot of companies have a limited opportunity in the end. Their technology or competency may have limited scope, as opposed to others that may be extensible to other markets, areas, regions, business models, etc. (i.e. Google vs Demand Media). I think when there’s a role for the founder to continue doing that first stage of innovation-driving in perpetuity, then you should stay, and will be happy doing what you do best. Otherwise, if a company scales into its ultimate opportunity and enters the optimization phase, then you should go, because your skill set does not have a great place in the now-scaled enterprise.

    But make no mistake, sharing leadership can be a challenge. It’s important to have one CEO, especially as the company starts to grow. This is why keeping the founder as CEO and getting a president and/or COO for delegation makes things work better and keeps the vision intact. But (1) delegating away real authority voluntarily is key, as is being confident enough to trust your team and patient enough to not need to act as CEO on every decision. (2) You will generally not get as good a person as president or COO, as you would if you give them a CEO position. There are tradeoffs.

    Entrepreneur/manager conflicts often result from entrepreneurs not completely understanding the real constraints, tasks, or roles of their core executive team, and sometimes it is the CEO who does not understand the reason they were hired. A good venture firm will have portfolio founders who have run into these situations and can advise you.

    Building a startup from the ground up is a very challenging and rewarding task. I firmly believe that the key to successful companies rests most often on the founders driving the vision. However, it is almost as important that the founders have enough self-awareness to recognize when they need help. Sometimes a founder is able to steer the ship as CEO from the bare vision all the way to huge success, and we prefer this when possible, but they’re almost never able to do it alone. Working openly with your board and your team to determine what executive additions are needed at various stages is critical to your company’s success.

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    TechCrunch / If, when and how to avoid hiring A CEO Sat, 10 Nov 2012 08:02:01 +0000 This post also appears on TechCrunch.

    Editor’s note: This is Part I of a two-part guest column written by legendary Silicon Valley investor Vinod Khosla, the founder of Khosla Ventures. In Part II, he will examine the signs that it might be time to hire a CEO. You can follow him on Twitter at @vkhosla.

    Though debated among some venture investors, in my view, it is always better for a founder to grow into being a CEO. When there’s a choice, the founder’s vision, culture, and approach are usually more important than “good management” alone. While I’ll offer some insights for investors, this piece is primarily addressed to the founders themselves. I’ll start with some suggestions for buying time to learn and grow into the CEO role.

    Build A Complementary Team

    Being supported by a strong, operating-type team will allow you to focus on leading your company’s vision, culture, and performance standards while your team executes. You don’t have to be good at everything if you build the right team and have the self confidence to learn from it. Be willing to hire people who are better than you and who have skills or experience in areas that you don’t. Of course, this advice doesn’t work in every situation, as it depends on your own strengths and weaknesses. From my experience, here are a few team-builder examples:

    John Hering (CEO/Co-founder of Lookout). When we invested in a Series A round for the smartphone security company, John was an unlikely candidate to grow fast enough to continue successfully as CEO. But he was able to because he built an exceptionally strong and complementary team and was very open-minded about learning from them. Of course, the company’s needs will change, and his hires over the next few years will determine the future of Lookout and his own career path.

    Jack Dorsey (CEO/Founder of Square): Jack learned a lot from founding and running Twitter, and he started Square with those lessons in mind. He built it differently from the ground up in late 2009 (KV led the Series A). Keith Rabois joined as COO less than a year later in August 2010 and has proven to be an excellent complement while Square has grown explosively. Jack pushes the vision, culture, and design, while Keith ensures executional excellence.

    Danielle Fong/Steve Crane (LightSail Energy): Steve and Danielle are another complementary pair. Danielle is a brilliant scientist who drives the vision and more, while Steve manages the team in the CEO role. Their initial market is electric grid energy storage, and they have many technical and market risks to sort out. According to Steve, Danielle’s most important role is to make sure that everyone’s working on the right things. “Her role is far from being only technical, as managing priorities is a big part of driving the vision,” he says. “She’s the best pure entrepreneur in the company.” To ensure continued success, the company will likely benefit from expanding the leadership team to include deeper market knowledge and product commercialization expertise.

    Assess Yourself

    Honest and informed self-assessment is critical. An experienced inner-circle/kitchen cabinet may be the most helpful tool for assessing your skills and what the company needs. Foster an open culture that challenges your own view and destroys any tendency toward group-think. If you have read Daniel Kahneman’s Thinking Fast and Slow, you realize how easy it is for any of us to fool ourselves. Our minds are not as rational as we believe while being quite good at rationalizing what we believe.

    You should also get advice from the outside: disinterested, objective help that is tough and critical but doesn’t include any governance (think “CEO coach” or “trusted critic” — anyone who’s experienced and will be honest with you). It could be an entrepreneur who has seen CEO transitions from the perspective of a board member, with both positive and negative outcomes. Khosla Ventures does its part by favoring brutal honesty over hypocritical politeness in our feedback, while supporting entrepreneurs in their growth objectives. This isn’t always the most comfortable, but it is very valuable if you as founder want your company pushed to greater heights and bigger things or to avoid risks that could be anticipated.

    David Friedberg, CEO of The Climate Corp., views assessment as a mindset issue that is symptomatic of failure and success:

    The skill of being self-assessing/self-critical goes hand-in-hand with getting your company to a point of success – ask yourself: Are you the entrepreneur that always responds to the question ‘How are things going with your company?’ with ‘It’s great! We’re the best.’ or ‘We are facing some meaningful challenges, but I think we have a plan that gets us over them.’ So many entrepreneurs answer in the former tone, and they are typically the least self-aware and self-critical. I think being self-critical is a great skill that goes along with being objective about your business’s shortcomings and working constantly to improve.

    John Hering adds that he has found it very constructive to do regular 360 self-reviews, where he will personally review his performance and collect feedback on strengths and weaknesses from the team. Reward constructive criticism by your team; this is tangible evidence of an open and intelligent culture. Constantly ask them “What can I do better?” and assess whether you’re getting honest and constructively critical feedback. It’s very hard for a CEO to get good feedback, since for employees who depend on you, it’s so easy to say “the right thing” vs. the brutally honest truth – it’s often necessary to dig it out by asking the right questions and building relationships.

    It’s important to think about not only your skills and abilities, but also your interests. As a founder, how do you want to spend your time? As the company grows, the tasks of the CEO include not only setting the vision, but also guiding the execution, ensuring necessary funding is in place, building the team, and managing resources. Day-to-day administration, such as conducting personnel reviews, can take an inordinate amount of time, so augmenting your team with a CEO, president or COO is something you may consider in order to maximize your contribution to your enterprise.

    Engage With Your Board

    Open discussion with your board is necessary. If you can’t discuss the company’s needs and risks with them, try to get a new board (or at least try to replace some of them). If you can’t get a new board, you can often change its bias by adding an influential person with the right perspective. When facing challenges with board members, sometimes spending time one-on-one to openly discuss their concerns and reservations is your best route to building a stronger personal relationship and reaching mutual understanding free from the political dynamics of a formal board setting.

    Lookout’s John Hering says:

    I strongly believe that choosing your investors/board members is a function of recruiting, especially for a first-time CEO. Bringing on board investors that have operating experience can be invaluable to helping a founder/CEO scale – from direct CEO coaching to recruiting key executives.

    In my view, other than hiring or firing a CEO, a board should not make any decisions. In private entrepreneurial companies, the board’s role is only to assist the founders by giving tough and honest advice (this is why we call our business “venture assistance” and never refer to Khosla Ventures as investors). Our ideal is often to get a sitting or recently retired CEO on the board who relates well with you, so you have an operator who gets it. Too many boards think they are in the governance business or the decision-making/voting business, which causes management to set up an information wall that blocks honest discourse.

    I feel a board shouldn’t have to vote on anything except their confidence (or not) in management. In 25-plus years of being on boards, I have never once voted against a management team except on the question of whether the CEO should be changed. I feel free to argue informally, to have real, sometimes uncomfortable discussions, and to leave the final decision to the team that will execute it. It is hard for a team to execute well when it does not agree with what a board voted to do, or conversely to be fully honest, open and objective about all its alternatives if they believe the board is going to make the final decision on an issue.

    The founder of Excite, Joe Kraus, felt I was pretty tough on him at times, but he once told me he gauged how important I thought it was to make the right decision (some decisions are more critical than others) by observing how hard I pushed a point of view. That is exactly my modus operandi, but I always leave the final decisions to the team. My role is to make teams think about things they are ignoring and to push them to greatness without ever making a decision for them. I often take positions I don’t believe in just because I think the team is not considering a certain perspective enough. I have now mostly stopped sitting on boards so I can focus more on exercising influence without authority. In companies where we have majority ownership, we will often avoid having any KV partner/employee board members if the company has a good board so we can give the team truly independent input.

    Monitor Your Company’s Culture

    Trust and openness are key to good dynamics within a company, while negative energies start a vicious cycle (like passive aggressive behavior vs. open discussion, excessive politics vs. meritocracy, undermining co-workers/leaders vs. constructive criticism and support, assigning blame vs. taking ownership). Address these dynamics early and avoid the downward spiral caused by increasing bad blood and lack of mutual understanding. This is relatively easy when things are going well, but founders and board members alike must be vigilant as the organization goes through challenging times.

    Being constructive but honest about concerns early may avoid cycles of distrust and a degradation of working relationships. A focus on brutal but constructive honesty is critical to avoid these sorts of challenges. Remember, you don’t know what you don’t know, so you want to be very critical about your own perspective as well, instead of reacting defensively to critiques. Sometimes, but only after all else fails, it is necessary to cut out the source of the sore, which is often a specific individual that is causing too much of this negative cycle.

    With respect to team relationships, The Climate Corp.’s David Friedberg shared some of his experience:

    I think part of avoiding negative cycles may be forming the ability to dialogue openly with your direct reports and broader team. For example, after something as simple as going out to dinner with members of my team several times, we could much more comfortably have heated disagreements without causing long-term harm to our relationships, and without losing respect for one another. Prior to those dinners, I was just the CEO and my word was final, so they weren’t sure if stepping on my toes would cause irreparable distrust/discontent/etc. Building personal bonds enables stronger professional critique and progress.

    Personally, I most want to engage with teams when I know I can challenge them, have difficult debates and arguments, and push them to sometimes uncomfortable limits, yet have them remain totally comfortable that I am looking out for their best interests. This reminds me very much of my parenting duties: My children never doubt that my goals and motives are to help them, but they don’t always agree with what I am saying. In the end, my children also know they will get to make the final decision and I will support their decision. Boards should push and challenge management teams without ever making the team feel like they cannot make the final calls or that a board member’s interests diverge from that of the team.

    Why Am I So Supportive Of Founders?

    Simply put, the success of a company often hinges on its execution of the founder’s vision. I prefer great vision and bad execution to bad vision and great execution. Companies are not “fire and forget.” In most cases, founders need to be continually involved to ensure that the vision is pursued relentlessly and updated incrementally as the team gains more experience. Every tactical decision a company makes should be tested for its consistency with its vision or the ship will drift toward convenience and short-term actions instead of staying true.

    I firmly believe that staying true to a vision is best achieved by having a founder as CEO. It is almost always preferable over “hired guns” that can help you execute on the vision but seldom understand it as well and are often too pragmatic. That said, a management hire can be very much a champion of the vision and a true partner with the founder. Good managers are seldom unreasonable, and it takes “unreasonable people” to do the sorts of great things that normal reasonable people wouldn’t consider until you showed them enough proof that it can be done. For that reason among others, boards should try as hard as possible to keep the founder in the No. 1 slot with a good president/COO or an otherwise strong execution team under him or her. This will preserve their instinctive feel for the new space and the new rules.

    Keep in mind, however, that these are generalizations and can of course be wrong. The specifics of a circumstance matter, and can change the optimal course of action, so understanding this is one of the larger contributions a board can make as a company grows beyond about 30 to 50 people. There are many other considerations regarding which roles to fill with manager types. Finally, it is important to remember that the best talent may not join without a CEO title, so a founder sometimes must balance between the vanity/utility/clout of a title and getting the best talent on the team. In the end, industry dynamics and rate of change often influence the best course for a founder to follow.

    There’s also an intangible aspect to it. Friedberg remarks:

    I think I am always a lot more willing to push/instigate dramatic/radical change than anyone else around me. I just know very clearly why we did what we did before and why we need to change it now, as we learn more about the market, etc. I think people that are hired to a company tend to lean towards doing what we’re doing now and not mess things up, because that’s what they joined up to do. I guess you could say that because I had a strong hand in building the sandcastle in the first place, I’m perfectly happy to knock it down and rebuild a better one 10 feet away, if need be.

    Regardless of your management team structure, founders should drive their strategy/vision as long as possible to preserve company values. This is important because intuition about the markets is essential in my view. Usually, good managers/leaders who make good hired CEOs are not great at this “feel it out” approach – founders often have a better sense of what a minimum viable product ought to be, how to iterate quickly, when to pivot, and when conventional wisdom needs to be thrown out the window and reinvented. That’s another reason that I prefer founders as CEOs with a hired manager/leader as president. But either mix can work (founder as president or CEO); it just depends on the founder’s personality. At the end of the day, it’s critical to hire a CEO/COO/president who has passion for the company’s vision and truly believes in and has respect for the founder.

    A traditional manager becomes important when the critical questions are things that have been seen before, like: “How sales people work” or “What constitutes a good VP of sales?” or “What sales cycle or sales economics really are in an existing area?” A board needs to differentiate between serving existing markets with better product vs. creating new markets or channels or “new wisdom” on how to do what well. Is it important to know customers or to “re-educate” them? All of these questions and the constituency of the current team determine how best a founder/CEO role should be configured if the interest of the company is what is being optimized.

    For example, Scott Cook founded Intuit in 1983. Bill Campbell served as CEO from 1994-1998 and has since served as chair of the Intuit Board of Directors. Bill essentially executed on the company’s vision for which Scott was the “keeper” before, during, and after Bill’s CEO tenure. This partnership was based on trust and mutual respect. When Scott was looking for a CEO to help lead Intuit, finding someone with shared values was critical to him. He knew Bill had the operational skills to lead the organization forward, but his focus in the interview and reference process was “Do we share the same values about how to run the business and lead its people?” Coming into Intuit as the new CEO, Bill believed it was critical to keep Scott engaged and active in guiding the company’s evolution. He believed in honoring and respecting the past as you move toward the future. It was not always easy, but the two worked hard to craft roles that played to each other’s strengths and leveraged their partnership. They didn’t always agree but they always acted with respect and trust.

    Though it rarely happens, the best situation may be similar to Google’s Larry Page and Eric Schmidt, where Eric helped as an interim CEO and close partner for a few years, and then handed the job back to Larry. Pulling this off really depends on having a board and lead investors who truly understand this process and do not feel that an experienced CEO is always better.

    Friedberg said:

    I think that I and a lot of founders try to become great managers as the business scales, but too often we revert to our standard state and just disappoint. While we can aim to become better managers, at the end of the day, we need a team of folks that are good managers of people and know how to coordinate them to help us achieve our goals/vision. I think that being a good manager is one skill that is almost universally learned. A (young) entrepreneur can be great at science, tech, negotiations, sales, etc. but generally doesn’t start early in their career as a great people manager – it is simply not an innate talent. As a result, this is the one key trait to look for in your direct hires, and I think it’s also the one thing I’ve seen folks fail at doing well – generally, they want to hire “young and smart” (mimicking themselves) and in so doing, hire first-time managers who may be great at particular functional skills (writing software, negotiating, design etc.), but lack the experience of managing/organizing/aligning people.

    In general, founders do better when path-to-market is very exploratory and rules need to be broken and “new wisdom” needs to be created. Managers/leaders do well when the path is clear, the industry is entrenched, and the product is an “expected service.” In old markets, it’s critical to have a laser-focused VP of sales who knows how to incentivize and motivate the sales team to go further than they would on their own. The playbook differs depending on whether you need to simply know your customers well, as any good salesperson does, or if you have to re-educate them and evangelize a totally new solution to problems the customers may not know they have.

    Of course, nothing prevents the founder from being or becoming a good manager (again, it is almost always ideal and it’s often important to employ tactics that buy the founder more time) with time to learn management and leadership skills. Taking the plunge and jumping without a parachute is especially valuable when there’s little to lose beyond investor money, but a lot to gain. However, as a company becomes more valuable, you need to worry as much about preserving the value that has been built as about building new value through new initiatives. This delicate balancing act moves a company from a “startup” to “traditional company building,” and should change the approach of the founders and the board. Suddenly there is more to lose and more to preserve! There is a time in a company’s history when there is value to preserve as well as to create.

    Friedberg comments:

    I agree with the wisdom that as the business scales, we need to be more cautious in business-building/changing. Sometimes I am too quick to react and push for change, and I need to be surrounded by folks who can help temper this with more thoughtfulness about the course of action.

    LightSail’s Steve Crane cautions, however:

    My sense is that failure to drive a successful product line to the next level due to concern about hurting its value happens far more often than the reverse. It’s a situation that’s more likely to occur when “professional” management is running the show in my experience. There’s a key balance to be struck between overly reckless founders and overly conservative managers.

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    TechCrunch Disrupt / Vinod Khosla and Michael Arrington Q&A Sat, 22 Sep 2012 04:48:17 +0000 In this video, Michael Arrington and Vinod Khosla discuss everything from being labeled “legendary” to high-tech beef companies.



    Fireside Chat with Vinod Khosla

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    TechCrunch / Do you need to be a jerk to be a successful entrepreneur? Mon, 10 Sep 2012 05:35:57 +0000 This post also appears on TechCrunch.

    Editor’s note: Legendary investor Vinod Khosla is the founder of Khosla Ventures. You can follow him on Twitter at @vkhosla. And make sure to catch Khosla’s fireside chat at Disrupt SF at 1:55 pm PT on Wednesday.

    I recently read Ben Austen’s WIRED article about Steve Jobs, which prompted me to put together my thoughts about the tradeoffs of being a successful entrepreneur. Austen’s article draws a caricature of Jobs and puts forth a series of false choices. After reading it, you might be convinced that you can either be a jerk and successful or decent and mediocre. Let’s take a look at some of the examples that the article highlighted from Jobs’ life:

    1. In 1975, Atari paid Jobs and Steve Wozniak to create the iconic game Breakout. Woz pulled four all-nighters to get it done—but Jobs pocketed the whole bonus that Atari paid for the game’s efficient design. Austen cites this to set up a choice between “push[ing] colleagues to extraordinary lengths” (implicitly, screwing them over) or being fair and honest. Pushing employees to excellence doesn’t mean you’re being unfair or screwing anyone over. On the contrary, people respond well to challenging but fair environments.

    2. In 1981, Jobs refused to give founding stock to Apple employee number 12, Dan Kottke. A fellow employee intervened, offering to match whatever options Jobs was willing to spare for Kottke. “OK,” Jobs replied, “I will give him zero.” Austen contends that good leadership is unsentimental, which comes with being disloyal to your employees. But lack of sentimentality doesn’t mean lack of caring and even generosity to those who have shown loyalty to a company. In fact, caring for employees, while being objective and critically honest about your issues/people, will attract and retain the right kinds of employees in my view.

    3. In 1994, Jobs announced he was firing a quarter of the Lisa computer team, telling them, “You guys failed … Too many people here are B or C players.” Tolerating only A players doesn’t mean you have to scare your employees with this kind of intimidation. But, being clear about not tolerating B players and fixing any hiring mistakes is key. Doing it gently and fairly, but very firmly, can absolutely be done.

    4. In 2005, Jobs ordered a smoothie at Whole Foods, but when the aging barista didn’t make it to his taste, he railed about her incompetence. Austen cites this as a choice between “forc[ing] the whole world to bend to your vision” or “understand[ing] the limits of your power”. Good entrepreneurs driving bold new visions will often do both.

    I’m not interested in commenting on Jobs’ personality and what it was or wasn’t. It doesn’t matter. What matters is that you don’t have to make the above tradeoffs. There is no single canonical model for the successful entrepreneur. Successful people come in all forms and they all have different limitations, baggage, prejudices, and ways of looking at the world. However, there are some shared characteristics that elevate them and their companies to rarified status. It’s worth taking a quick look at these key attributes.

    “Build a team of A players” is part of the entrepreneur’s catechism. More than anything, building great teams (besides providing vision and culture) is what great founders do. But Austen’s article sets up a tradeoff here: You can build a team of great players, but then you have to have a culture of fear that doesn’t allow anyone to take risks. Every successful entrepreneur needs to build a great team.

    Being clear about not tolerating B players and fixing any hiring mistakes is key. If you don’t fix B player mistakes by moving them to less critical roles or areas where they can succeed or, if none exists, by doing a fair exit deal with them, you will demotivate your best employees and bring down the standards of excellence. Austen’s article makes a valid point here. But how you do it, along with the style and fairness metrics you use, is what will determine your employees’ goodwill towards your venture. Doing it gently and fairly, but very firmly, can absolutely be done.

    The ability and willingness to make tough calls, whether they involve products or people, is part of the required skill set for entrepreneurs. They have to be objective, intellectually honest leaders. After reading Austen’s article, you might think that unsentimental leadership comes at the price of loyalty, but that’s not true. You have to be objective with your team and yourself so you don’t sink the ship, while pushing everyone to deliver their best. Have the courage to hold back products that aren’t good enough and give unvarnished feedback when that happens. Spending hours working on the wrong thing doesn’t count, no matter how hard someone works. You can and should be tough, require excellence, and criticize without being denigrating.

    That being said, I prefer brutal honesty to hypocritical politeness. You might hurt some feelings, but it likely won’t do net harm among the A players. This is where the clarity and quality of vision matter. Tolerance for sloppiness and “good enough” mediocrity in anything critical is a killer. Building loyalty, trust, motivation, and a sense of team work are critical parts of optimizing for the long term. Creating this kind of honest, unsentimental, but fair, environment will actually foster loyalty in your employees.

    Good etiquette, unless it gets in the way, increases the probability of success. More people will want to work with you and see you succeed. This is especially true if you critique the work, not the people. It’s hard to do, and I often catch myself making this mistake when I am frustrated with what has not been done, but training, self-awareness, and having a person nearby who’ll call you on it helps. Page, Brin, and others have all enjoyed enormous success, but they haven’t had to do it by being jerks. They do it by valuing A players and logical debate; they’re always willing to discuss “why.”

    Jobs was successful because his unreasonably high goals, brilliant insight, and relentless passion made people want to work with him. The story about him, Woz, and what happened with the money paid for their work on Breakout has been told before, and Austen uses it to try to convince you that demanding excellence is the same as taking advantage of people. I don’t see the connection. Maybe Jobs thought Woz was not doing his fair share or was a B player? I don’t know his reasons, but a good entrepreneur has to require the best and fix any compensation problems that are not commensurate with contributions. This has to become part of your culture, and it has to be shared by everyone in it. I believe employees who aren’t delivering should be told directly they aren’t a fit for the environment, and they should be put into a more appropriate role. Tolerating B players in critical roles is unfair to the rest of the team. Being nice or afraid to face the hard facts can be damaging to a company’s culture.

    Setting a high bar for performance has to be part of the company culture. Objective decision-making is important; but being a tough leader isn’t the same as being a dictator. There are things most people can’t do as well as Jobs, but there are definitely things that can be done much better. You don’t have to have a surly personality to be successful, although sometimes it comes with the territory. Being that rational might come off as a little too Vulcan, but objectivity matters and it gets respect.

    Fairness and strong ethics are core long-term values that build trust. It is fine to “violate any norm of social or business interaction that stands between you and what you want,” so long as it’s legal, ethical, and fair. I find generosity also pays. At Sun, we split founder equity evenly and in single digits despite our different roles, and it worked out well. A great place to start would be Reed Hasting’s presentation on the culture he is trying to develop at Netflix.

    Dreaming up your own vision of the future is part of being a great entrepreneur. You have to be impatient. You have to force change and push the world forward against its own inertia. I’ll grant part of Austen’s point that this sometimes shows in ways it doesn’t need to and often comes with certain personality types that would benefit from being moderated. But fixing what needs to be fixed in the world requires people who aren’t willing to toe the line and accept the “limits of [their] power”. It doesn’t happen any other way. Refuse to compromise your visions.

    The other part is convincing everyone else to see it the same way and follow you there. Whether you’re building spaceships for a fraction of the price that NASA used to pay (SpaceX) or reinventing money and the way commerce is done (Square), you have to be unreasonable and you have to push the world forward against its own inertia. Do this without apology and do it without being a jerk.

    But, if being a “jerk” means refusing to compromise your visions, or striving for perfection, or not tolerating B players, then so be it. You don’t have to compromise on what really matters. It’s usually only a few things so reserve your silver bullets for them. But you can be flexible about your tactics and sensitive to people when it doesn’t get in the way of your key goals or when tactics cause a minor diversion to your long-term vision. As I like to say “be obstinate about your vision, not your tactics”.

    Don’t fool yourself though. “Forcing the world to bend” requires sacrifice, which Austen correctly points out in his article, albeit with examples that might make you think that being a bad parent, an uninvolved member of society, or a spiteful human being is the price to be paid for major success.

    Entrepreneurship is not a job; it’s a lifestyle! The important thing is to be clear about what priorities are important to you and what you’re trying to achieve. Once you do that, it won’t feel like you’re giving up that much. While my kids were young during my busiest times, I personally chose to sacrifice many things, except for family and work. I made it a habit to have 25 dinners at home per month, and I had my assistant report on my “home for dinner performance” every month (anything important is worth measuring). I’ve seen many other people save kids’ time, which is usually 6–8pm, and sacrifice other times. Figure out why you’re doing what you’re doing — fame, fortune, friends, fervor, impact, whatever it might be —be clear and don’t mix objectives. You can “change the world” and “have a great family life.” Other things can be sacrificed instead.

    Above all else, great entrepreneurs are driven by passion and have the courage to execute on their vision of the future. They are not reasonable people. Don’t avoid trying to change the world because you don’t want to “end up like Steve.” It’s a false choice, and the world is better off because of Steve Jobs. We need more people with the audacity to take on energy, healthcare, poverty, food, education, and the rest of the big challenges facing us. It’s fun and ultimately rewarding to try to do these hard things, even more so than making money. Martin Luther King, Jr. told us that “human salvation lies in the hands of the creatively maladjusted.” Turns out he knew something about entrepreneurs.


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    Guide for effectively managing terminations Wed, 01 Aug 2012 15:29:22 +0000 Sometimes it doesn’t work out…

    There are various reasons why you may find yourself in a situation where you have decided to terminate an employee’s employment

    Each situation may require a different process but all should be addressed with dignity and respect for the employee.

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    The New York Times / Maintain the Silicon Valley vision Sat, 14 Jul 2012 05:42:38 +0000 This article also has been published by The New York Times.

    Vinod Khosla is the founder of Khosla Ventures, a venture capital firm started in 2004. His firm tries to make investments in disruptive technologies in Internet, computing, mobile, silicon technology, alternative energy and medical technology. He worries, though, that greed, not vision, may be motivating some entrepreneurs in Silicon Valley. Mr. Khosla submitted this guest post to Bits.

    Some people seem to think that getting acquired should be the highest aspiration for an entrepreneur in Silicon Valley. I disagree vehemently.

    In fact, I think that mindset does a disservice to the entrepreneurs in Silicon Valley and around the world. This is exactly the wrong way to think about building a start-up not only because it develops the wrong company culture, but on a large scale it can poison the unique and innovative ecosystem that has developed in Silicon Valley over the past 40 years.

    You want missionaries, not mercenaries –passionate, maniacally-focused founders who believe in a vision. Founders like this draw the most gifted and passionate employees, who maximize the chance of success, even if they ultimately fall short of their initial goals and get acquired.

    There are of course mercenaries and people setting up for “acqui-hires” in the valley as well, but that is not what Silicon Valley’s special sauce is about.

    In my view, it’s irreverence, foolish confidence and naivety combined with persistence, open mindedness and a continual ability to learn that created Facebook, Google, Yahoo, eBay, Microsoft, Apple, Juniper, AOL, Sun Microsystems and others.

    Having a vision does not prevent you from being acquired, but starting a company to “do a deal” is not what Silicon Valley culture is about even if most companies that have a successful exit are acquired. An acquisition may be a safety net, a way to free yourself or learn to pursue another bigger or more interesting vision, but those are tools rather than goals of the true Silicon Valley entrepreneurs I have seen. (When I say Silicon Valley, I mean it how my Kleiner partner John Doerr meant it when he used to say “Silicon Valley is not a place but a state of mind.”)

    The deal mentality is a Wall Street specialty and doesn’t fit the valley culture. Yammer for instance (recently acquired by Microsoft for $1.2B) was not built to be exited quickly. But when an attractive offer came along the management team chose to take it. That happens quite often and is consistent with how the valley culture should work.

    Seeking an acquisition from the start is more than just bad advice for an entrepreneur. For the entrepreneur it leads to short term tactical decisions rather than company-building decisions and in my view often reduces the probability of success. It can lead to sub-par “guns for hire’” rather than a team excited about a larger vision. It leads to a job not a lifestyle.

    It makes the world poorer too. Imagine in 1980, if the highest goal of every start-up was to be bought by DEC or IBM for $20M in a couple of years. I’d assert that we’d still be in the Stone Age of high tech – using mainframes and cell phones that bolt to the floor of your car – no Internet, no biotechnology, no e-mail, no computers in the home, much less in your pocket. Imagine a world if Google was sold to Microsoft. Imagine the world of mobile based on Nokia and Motorola if Apple had not been restarted by a missionary entrepreneur named Steve Jobs who cared more for his vision than being tactical and financial. Each of those “no vision” start-ups looking for a quick sale would only try to do something safe and derivative that fit into IBM’s, NBC’s, Cisco’s Pfizer’s or Nokia’s old models.

    It’s hard to imagine all the things that wouldn’t have happened, because it’s easy to forget how much the world has changed due to dreamers and entrepreneurs. Many big company advances were also prompted by start-up visions. It was Nexgen, a little start-up, which forced Intel to work much harder on processor architectures. And before Juniper threatened it, Cisco did very little in TCP/IP Internet technologies. In fact, their chief technology officer told me when we were starting Juniper that they would never do an Internet router above OC12, a speed 8 times slower than the one that serves my house today, just because the major telecoms said they would never switch to TCP/IP. Now the world runs on it because we took a “build it and they will come” approach.

    In 1980, Ken Olsen, chief executive of DEC, couldn’t imagine people ever needing even one computer in their home, and now even our washing machine, toaster, refrigerator and car have one (or many) processors. The Apple iPad, at a few hundred bucks, is far more powerful than the most powerful computer that DEC built twenty five years ago.

    All the best engineers and thinkers would work at big companies accomplishing only a little and maintaining the status quo rather disrupting the status quo or contributing to some part of the world’s needs.

    And we need that kind of disruption in food, agriculture, clean energy, healthcare and education among many other areas, which will likely be driven by a Silicon Valley state of mind.

    The creativity, productivity and pace of innovation in Silicon Valley relies on brilliant and foolish entrepreneurs being unreasonable enough to believe they can be the exception to the “rule.” As George Bernard Shaw said, “all progress depends on the unreasonable man.” If everyone played it safe, we wouldn’t get anywhere.

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    Launch Silicon Valley / Interview with Vinod Khosla and Forbes’ Eric Savitz Sat, 09 Jun 2012 04:45:49 +0000 In this video, Forbes’ Eric Savitz interviews Vinod Khosla.



    LAUNCH 2012: Closing keynote

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    Leadership and the virtuous cycle: How I made 44 quarters in a row Wed, 23 May 2012 02:19:53 +0000 In this video, hear from entrepreneur, Mark Leslie, as he discusses the virtuous cycle that can be created within a business that drives success (and revenue).



    Leadership and the virtuous cycle

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    Lesson from screwing up Wed, 23 May 2012 02:17:26 +0000 In this video, hear from Vinod Khosla, as he discusses all the things he’s learned from years of screwing up. 



    Lesson from screwing up

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    Future babble: Why expert predictions fail Wed, 23 May 2012 02:15:06 +0000 In this video, hear from author and expert on experts, Dan Gardner.



    Future babble: Why expert predictions fail

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    Cybersecurity: Managing complex risk in a dynamic environment Wed, 23 May 2012 01:53:30 +0000 In this video, hear from Matt Devost, the CEO of FusionX, as he discusses the fundamental risks associated with cybersecurity.



    Cybersecurity – Matt Devost, President and CEO of FusionX

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    Failure as a tool Tue, 22 May 2012 04:14:06 +0000 “Google’s greatest strength may be the luxury of failure” – WSJ, 5/17/2013

    In this talk, listen to Vinod talk about how to use failure as a tool and why it may be the single most important tool we have. 



    Failure as a Tool: Vinod Khosla, Founder of Khosla Ventures

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    Fireside chat with Bill Gates Tue, 22 May 2012 02:48:42 +0000 In this fireside chat, hear from Vinod Khosla and Bill Gates as they discuss a variety of topics from food to toilets. 



    Fireside chat with Bill Gates of Microsoft

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    Convergent, fast-moving technologies and the future of health and medicine Tue, 22 May 2012 02:45:01 +0000 In this video, hear from Daniel Kraft, MD, the executive director of FutureMed, as he talks about where technology will take the future of health and medicine. 



    The future(s) of health

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    The feeling of knowing Tue, 22 May 2012 02:41:42 +0000 In this video, hear from author and neuroscientist, Robert Burton, as he discusses why people are overconfident and how we should think about decision making. 



    On being certain, even when you’re wrong

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    The lean startup Tue, 22 May 2012 02:38:24 +0000 In this video, hear from entrepreneur and author, Eric Ries, as he discusses lean startup principles. Also, find out why his favorite business movie is Ghost Busters. 



    Lean startup

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    Customer management is like dating Tue, 22 May 2012 02:30:31 +0000 In this video, hear from general partner of Kleiner Perkins, Bing Gordon, as he uses the metaphor of dating to discuss customer management from prospecting to long-term retention. Learn about the algorithm for dating a cat to tactics used on eHarmony and OKCupid.



    Customer management is like dating: new rules of engagement

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    Your brain on games Tue, 22 May 2012 02:28:04 +0000 In this video, hear from game designer and author, Jane McGonigal, as she discusses everything from the current state of gaming to whether or not gamers have super powers. 



    Your brain on games

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    Where will biofuels and biomass feedstocks come from? Fri, 02 Mar 2012 03:16:06 +0000 When it comes to biofuels we have a few choices and options – we can do it poorly, with short- run approaches with no potential to scale, poor trajectory, and adverse environmental impact, or we can do it right – with sustainable, long-term solutions that can meet our biofuel needs and our environmental needs. We do need strong regulation to ensure land use abuses do not happen. A recent report published by the Royal Society highlights some of the factors that need to be balanced – they note that some changes in land use (such as clearing tropical forest or adapting peatlands for crop cultivation) can do more harm than good.  To counter these potential abuses, we have suggested each cellulosic facility be individually certified with a LEEDS (international certification program for “Leadership in Energy and Environmental Design”, a green building rating system) like “CLAW” rating and countries that allow environmentally sensitive lands to be encroached be disqualified from these CLAW rated fuel markets. We think a good fuel has to meet the CLAW requirements:

    C – COST below gasoline<br>L – low to no additional LAND use; benefits for using degraded land to restore biodiversity and organic material<br>A – AIR quality improvements- i.e., low carbon emissions<br>W – limited WATER use.

    Cellulosic ethanol (and cellulosic biofuels at large) can meet these requirements. The Royal Society notes that the uncertainty of some biofuels do not obscure the main benefits of cellulosic fuels: “(1) biofuels from cereals, straw, beet and rapeseed are likely to reduce GHG emissions,
    though the estimated contribution varies over a wide range, from 10 to 80% (averaging about 50%) depending on crop, cropping practice and processing technologies; (2) biofuels from lignocellulose material are likely to show a twofold or more improvement in average abatement
    potential when compared with biofuels derived from food crops.”

    Our research and data suggests that cellulosic ethanol can reduce emissions on a per-mile driven basis by 75-85%, with limited water usage for process and feedstock as illustrated later. Range, Coskata and other companies currently have small scale pilots projecting 75% less water use than corn ethanol, and energy in/out ratio between 7-10 (Energy returned on energy invested or EROI, even though we consider this a less important variable than carbon emissions per mile driven). The question that eventually comes to the forefront is land use and biomass production – how much will we need? What will it take? Is it scalable enough to make a meaningful positive impact? To be conservative, we assume CAFE standards in the US per current law though we expect by 2030 to have much higher CAFE and fleet standards (hopefully up near 54 miles per gallon (mpg) or
    100% higher than 2007 averages), thus dramatically reducing the need for fuel and hence biomass. For, this to happen, we need a combination of factors, including lighter vehicles, more efficient engines, better aerodynamics, low cost hybrids and whatever else we can get the
    consumer to buy that increases mpg.

    What do we believe? As we will cover in this paper, we believe that given reasonable assumptions on technologies, biofuel yields, and adoption of better agronomic practices, most of our biofuel needs can be met with fairly limited land usage. From a technology perspective, the advances and continuing research into thermochemical processes offers potential far exceeding that of standard biochemical approaches. From an agronomic perspective, a greater understanding about the benefits of crop rotations and conservation practices combined with an ability to use generally underutilized land offers us the ability to vastly increase our biofuel producing abilities without cultivating additional land. In particular, we think the potential for winter cover crops as a biofuel source has been greatly understated, and that even modest yield assumptions would allow them to meet a significant portion of our biofuel needs. In the long run, the combination of these multiple factors (an example of the innovation ecosystem at play) will allow us to sever our dependence on oil – for good. Hybrid vehicle technologies will help but not materially on a worldwide basis at current costs.

    A note about evaluating alternatives – when looking at a potential solution, it’s important not to evaluate a technology/approach in isolation; rather, we ought to compare it relative to other viable approaches to determine its actual feasibility. For example, every nuclear plant that we did not build over the last 50 years (due to environmental concerns) was almost certainly replaced by a coal plant, whose environmental footprint was significantly worse. We are in danger of doing it again, by going after pie-in the sky or uneconomic solutions to replace oil. That could lead to even more problems – the alternative (as a long run transportation fuel solution) may well be oil shales (Canada is moving aggressively in this direction), which are even worse environmentally. Letting the perfect be the enemy of the good is irrational – marginal analysis counts.

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    TechCrunch / The “unhyped” new areas in Internet and mobile Mon, 20 Feb 2012 03:46:13 +0000 This post also appears on TechCrunch.

    We are in a whole new world of platforms, a post-PC era, which I’d more aptly describe as the always/everywhere era, finally, and that means a whole new set of opportunities. Add to it the fact that because of a variety of factors too numerous to cover here, the cost of experimentation has gone down dramatically (one can start a web startup or write an Android app with no more than a student credit card!) and raw computing power is taken for granted.

    What you get as a result are the recent successes in the Internet/mobile space like Facebook, Twitter, LinkedIn, Zynga, Groupon and others, all of which have reenergized both entrepreneurs and investors. Many of these new startups will be the usual poor clones or feature add-ons to Facebook and Twitter, or poor attempts at doing one feature or another better than Zynga, or applying LinkedIn to a small vertical.

    A few will be successful, many will fail, some will be acquired for a piece of technology or for the team (acqui-hires). But that does leave the question: What else new has the potential (nothing is certain!) to be truly disruptive or establish a new category in the domain of consumer Internet/mobile/services (which to me are fast becoming interchangeable)?

    The post-PC always/everywhere platform will be defined by the many variations of mobile, always available, silent complementary standbys (like home or personal networks and agents) and more. A new category to me means doing something old differently enough to have it become a large business or have substantial impact among users.

    AirBnB and Instagram would be examples of companies whose categories existed prior to their entry, but they are meaningfully different. Likewise, LinkedIn was not the first professional social network but it had substantial new impact and business potential.

    Personally, it is hard to see all the areas in which some disruptive or large new segment idea will take off, but it is clear that there are many. So when going fishing for these, I have defined certain pools that are more interesting than others in which to fish. I call them the “unhyped dozen” (to go with my energy investing activities, which I call the “clean dozen”) and am hoping the readers of this post can add another dozen. Treat them as potential fishing ponds rather than predictions. Some of these areas will end up pretty unremarkable and others unmentioned here will surprise us (so, to you entrepreneurs, hang on to your idea I failed to mention).

    So here they are, with some examples drawn both from inside and outside of our portfolio to illustrate what I mean:

    1. Data Reduction or Filters (Siri, Donna, Recorded Future, and many others): “Reducing, filtering and processing data streams to deliver the information or action that is relevant to you.” The web has been expanding what we have access to. It is time for tools (our proxies or agents on the web) to start reducing the amount of information coming at us. News or article feeds, TV shows, YouTube, “must watch” emails — these can all be prioritized for us like our proxy was a virtual assistant who knows our current context and our preferences. Even serendipitous feeds will have a higher probability of being interesting. More of “do what I mean,” instead of “make me spell it out in detail” interfaces, will prevail. Siri is a start, but a great application could go much further and reduce, prioritize, and recommend my to-do list according to the time I had, instead of always making me feel I was behind and driven by external interrupts and priorities. Advertisers could approach our “proxies” directly and the proxies could decide if something is of interest to us—automatically separating “wanted advertising” from spam. Meanwhile, the level of data reduction will be based on our specific context, our current priorities, our social networks and our interest networks. Underlying this is the evolution of A.I. and advanced machine learning — which I discussed in a separate post — and even big data analytics.
    2. Big data or Analytics (Ness, Billguard, The Climate Corporation, Kaggle, Datasift): “Analyzing massive amounts of structured and unstructured data to deliver unique services or analysis.” Per the OATV website, so many of the most transformative applications today rely on massive cloud databases — often generated by user participation — with meaning extracted from that data by predictive analytics and powerful machine-learning algorithms. We see the back-ends of many of these applications becoming the functional equivalents of subsystems in a kind of internet-scale operating system driving not just the web but mobile devices. Location, social networks, identity, and personalization are just the tip of the iceberg. There will be countless new types of data streams and new ways to make data useful. Fundamental data utilities and applications will be built on these and a lot more information and data reduction will be extracted from this hairy-looking big ball of often-unstructured data. New data sources will become valuable, as will new technology for scaling data, new algorithms, and new ways of connecting people and devices. Bionic software apps (another OATV idea) that supplement or are supplemented by humans in conjunction with big data could become newer versions of Mechanical Turk by Amazon. All these will be part of user utilities, business services, health diagnosis, credit, fraud, risk, education, advertising targeting, user relevant services and much more. The colors and text chosen for menus and buttons will depend upon data analysis, as well as discount offers and a lot more. Much has been written about big data and it and may be getting past the unhyped label! There’s a lot going on already – Tellapart, Factual, Ayasdi, Explorys, Platfora, and Metamarkets come to mind, but there are many more.
    3. Emotion (Foodspotting, Ness, Instagram): “Services that evoke strong emotions in users,” which is often a component of other categories, can also be enough of a driver to be mentioned separately. I include here the applications that because of their emotional appeal are adopted more rapidly or easily (more pull from users than push to them) as a major component of the application. Some will be useful services (Ness, AirBnB) and in others the emotional appeal itself will be the “product” (Angry Birds, Foodspotting. Fotopedia). The power and leverage of this class of applications are making designers the essential ingredient of a startup’s founding team and “experience” design (instead of just user interface design) a key skill and product offering. I might lump new classes of games into this category though I consider games an established category and I am trying to focus on new, surprising areas in this post. The line is hazy though. One could reasonably put gamification of everything from health to education to training to shopping as a new emotional tool for applications.
    4. Education 2.0 (it’s early, but Altius, Khan Academy, CK12, Udacity): “Education models that dramatically reduce the cost and increase the availability of quality learning.” The puzzling question is why education has not already changed. My guess is we have not experimented enough with non-linear, rapidly evolving, out-of-the-box approaches but have instead tried to force-fit ‘multi-media textbooks’ and other traditional (often broken) ideas into the “computerized” model. We have also had too much punditry from experts in education instead of just trying hundreds of new ways of doing things. This is starting to change; it makes me optimistic that what has not worked so far can now work, especially given the role gamification can play in increasing student interest and social can play in increasing peer and teacher support and assistance. I believe past attempts have failed because of the specific tactics they adopted instead of the overall strategy of new modes of education. Data analytics on what works can also help here. We can re-imagine credentialing as one of the side outcroppings of online education. For instance, Interview Street expects that a programmer’s performance on their ACM “programming puzzles” could be used as alternative credentials if they never went to an Ivy League school. Add your work on Github and an employer may prefer you to a Princeton computer science grad even if you went to Banaras Hindu University in India. Meanwhile CK12 can get you credit for any time spent during high school helping other students, as part of your application to Harvard, provided you use an online study help group or application. And Altius gives high school students who did not get serious about college until too late a second chance to re-credential themselves and get into over a hundred and forty colleges—basically a second chance to get your grades up! Even more extreme, in a separate post I also examine if we could get to self-driven education in high school and focus on job-targeted skills learning without college degrees (nursing or plumbing anyone?) and more.
    5. TV 2.0 (Miso, Flingo, Maker Studios, both first and second screen apps as well as content production & sourcing): “TV as an interactive and social experience both on the primary and the second screen.” Most U.S. Internet users, I am told now, have a second screen in front of them when watching TV. Whether it is true or not, it soon will be, and the interaction that is possible will allow for all kinds of creativity and user engagement shows/applications/techniques. More importantly, program production, be it video for TV, audio for radio, or text for next-generation news formats (tomorrow’s “newspapers”?) could be crowdsourced or gamified. This allows for new personal brands to emerge (much like the Drudge Report or Politico or some YouTube channels that are emerging now). Better experiences for users, better targeting for advertisers, more access for programmers and the creative types are all likely. Your proxy or agent prioritizing your viewing or reading queue will be an adjunct area. The big guys and the small guys meanwhile will battle for newer first screen experiences and applications.
    6. Social Next (intersecting with all the interest graph stuff and verticals like Github, Coursekit, and Researchgate): “Social as a useful and productive part of lives—enabling collaboration and deep community building around the world in specific areas.” I include here new uses of social such as Github to do a cooperative task or the kind of social learning Coursekit and others are trying to encourage. I suspect we will see the power of social harnessed for many applications beyond just the Facebook friends network or the Google+ circles implementation. Beyond the few examples cited above, it is hard to envision all the specific vertical applications, though LinkedIn is just another verticalized social application and I expect to see more of those. Some would say social is a part of most applications/uses, though there is a difference between adding social functionality to e-commerce and applications uniquely enabled and defined by social experience.
    7. Interest-based networks (where Meebo is pivoting to, Twitter,, State): “User driven content that maps to people’s interests both for a better user experience and better targeting.” I was impressed by a post by Naval Ravikant and Adam Rifkin on interest graphs and why they are different from social graphs. I do think a number of startups will either target interest graphs to create a network different from Facebook’s and others will use these graphs as monetization strategies. Social is about friends, while interest is about your interests and the two may or may not intersect. For instance, my daughter’s startup Teethie is trying to do intense conversations around your passions. I see interest-based networks as different from social networks (friends versus interest-focused activities) and I consider interest more easily monetizable and more susceptible to the emergence of innovative new applications.
    8. Health 2.0 (Jawbone UP, Nike Fuelband, Empatica, BodyMedia, MC10, Fitbit, iBike, Recon, Withings, Alivecor): “Exponentially growing data will yield personalized lifestyle suggestions, improved outcomes, predictive diagnostics and applications we can’t imagine.” Health applications will flourish in many directions and are laid out in a separate post. From more data (especially more baseline, or “healthy” data), “health”-care instead of “sick”-care, more DNA and proteomics data, to mobile-based “second opinions” substituting for doctors and more traditional health systems, we will see an influx of non-sick status data and applications leading to what is called the Quantified Self. You cannot improve what you cannot measure, and these days you can measure just about everything – external factors from pace to distances covered to altitude, and internal factors from heart rate to blood glucose levels to sleep patterns and much more. Alpha geeks have been hacking together solutions to track various types of personal data for years, but with the advent of open source hardware, cheap sensors and smart mobile applications, we believe that there will be a new class of applications unlocking the value of this data. And, in doing so, they will reshape the understanding of our own health and the health care industry as we know it and probably provide a lot of fun, games and motivation along the way. All this data will be complemented by artificial intelligence and machine learning systems.
    9. Internet of Things/Universal ID/NFC/Smart sensors (a technology with the applications still to emerge): “Sensors and authentication technologies which will interconnect everything and remake our interaction with the world around us.” Sensor networks aren’t just for cargo containers anymore. Sensors have found their way into every aspect of our lives — whether it’s the phone in our pocket, the digital photo frames on our desks or the barcodes embedded with information in our local grocery stores, often complemented by NFC, Bluetooth LE, Wi-Fi and other networks. The network of things is supposedly growing faster than any other network, social or otherwise. We’ve just begun to scratch the surface on the kinds of applications infrastructure needed to harness its full potential. Meanwhile,the management of identity, privacy, security and verification is a huge theme for the next decade and hasn’t yet been addressed much beyond the Facebook login, which makes it exponentially easier to take advantage of people’s online personal data/money/(and privacy which some will complain about). There is probably a completely disruptive way to reinvent online presence and verification, beyond the universal ID system (albeit an offline system with online instantiations) being pioneered in India.
    10. Personal Collaborative Publishing (Pinterest, Tumblr, storify, “Truly free press with no barriers to entry and personalized interest-based curation.” This trend seems to be moving forward fairly rapidly. I’m not sure if it will become more or less verticalized or what new dimensions will emerge but the potential clearly remains promising. Self-publishing on Amazon is becoming real, removing the gateway of traditional editors and the tax of traditional business models. Where will this lead? Books, especially non-fiction, can become more interactive, crowdsourced (, social and collaborative.
    11. Utility Apps (Siri, Seatme, Ifttt, Uber, and many, many more): “Leverage device ubiquity and context to deliver valuable services.” It goes without saying that we will continue to see more and more utilities that are just plain helpful to us. I do wonder how many major new categories of utilities there will be. Ideas anyone, for major new categories? Utilities will provide personal assistance, productivity and maybe even decentralized work (new clones of Mechanical Turk or Skype!). They will aggregate experts into marketplaces (see below) or crowdsourced services or just plain telemedicine and remote reading of your radiology scans (yes it is hard to separate any of these applications into clean areas – overlap is inevitable). One of the evolutions we will see is that these utilities (and other real/virtual crossover areas like gamification) will require less, not more, input from us as they evolve – as the virtual bleeds into the physical, the enhanced experience will become more seamless and a natural part of activity. In a few years it will seem ridiculous that we had to take out our phones, open an app and type something in order to check into a location in order to activate a daily deal—how awkward! Personal transformation might be a “utility” combination of the Emotion, Education 2.0, and Health 2.0 categories, but we are still trying to tackle the problem of how to use all of these new tools for personal transformation, be it habit forming (e.g. learning, meditating) or physical metamorphosis (e.g. losing weight).
    12. Marketplaces & Disintermediation (Interview Street, Kaggle, Etsy): “Remove the middle man, increase market efficiency and produce better results, faster“ Marketplaces are about economic efficiency (and active engagement) and more and more of them will keep emerging. My favorite new marketplace is Kaggle, where 13,000 data scientists can compete with their talents and the best ones can benchmark themselves and hopefully get paid accordingly. There will be more of these, unconstrained by the additional friction, the overhead (which is really a tax) or the constraints often placed by traditional gatekeepers. Gatekeepers who collect “taxes”, because of their lock-in, have the most to lose from the freedom that comes from connecting buyers and sellers directly without intermediaries. I wonder when more intermediaries will be disintermediated even beyond marketplaces, and I’m looking forward to it. Why does Tom Freidman need The New York Times to get readers, or can a Washington Post writer just get publishing and distribution services and develop his own loyal audiences as the SBNation bloggers have done? This possibility seems quite plausible in the face of news filters that are tailoring content to user preferences. Deep user preference through big data analytics will reduce the need for the Times’ editorial staff, and editorial work will become a more specialized and more valuable function. By reducing friction and increasing access between producers and consumers of content (and reducing the number of “broker” jobs which are essentially unproductive types of work and friction on the whole system), next-generation marketplaces and disintermediation could expand the rate of development and rate of quality improvement across a wide variety of fields. In the end it means more creative people trying to create – and a much more transparent way to select for excellence and improve on it.

    Of course, it is hard to classify any startup into a single category. Kaggle is both big data and a marketplace for data scientists. Ness is at its core a big data analytics play but its appeal is primarily emotional. Many in fact are more often than not enabled by the new mobility and capability in both phones and tablets.

    So, what have I left out?

    I chose not to define mobile or tablets as a category but it clearly is a major driving force behind much of this innovation; mobile is the theme that underlies the concept of “post-PC” or “always/everywhere.” The emergence of new languages like HTML5 (which I suspect will soon turn into new, hopefully cross-platform standards through the addition of traditional operating system services like inter-process communication) will enable more innovation, which will sell more devices, and drive even more innovation. Other capabilities like sensors around always/everywhere devices will enable health, the Internet of things and other functions. Compasses, GPS sensors, accelerometers, touch interfaces, voice, and image capture all open the door for rich new experiences. I consider all of these enablers rather than categories by themselves.

    I ignored areas like cloud computing, because they are not new anymore (though still a source of significant innovation and a source of services that can be drivers of innovation). Given the consumer orientation of this post, I also ignored the changes in enterprise that consumer technologies are driving. That trend I suspect will continue to accelerate and surprise.

    There will be both large permanent innovations and categories established as well as passing fads (especially in gaming). I don’t list games as a “new pond” here, though it will continue to grow and surprise us in categories—whatever the next Angry Birds/Farmville phenomenon will be—while gamification will become pervasive in everything from education to health to shopping. Given the similarity to social’s ubiquity, I admit a slight inconsistency given that I’ve included new classes of social applications labeled Social Next. Both gamification (separate from gaming) and social may become basic tools that enable many of the areas I mentioned. Still, I cite some examples of what defines Social Next versus adding social functionality to an application like e-commerce.

    I also did not focus on e-commerce given its already substantial popularity. Still, we will continue to see innovations in this area, especially given the different optimizations that are possible on new sized screens like mobile phones. I expect e-commerce to be disrupted by many of these ponds—and the move toward all commerce being e-commerce creates massive potential. For instance, what’s the potential impact on local merchant expertise getting supplanted by mountains of behavior data, curation and social recommendations? I wonder what will happen to local or hyper local products; will that be the domain of the traditional large players or Internet players given their scale and greater access to data versus the local merchants? That question is in the hands of the data analytics and data reduction applications. Will some local merchant expertise get supplanted by disruptive data analytics and reduction in some categories, while other services and certain products from local merchants get enhanced?

    Then there are payments; I think it is possible that we are seeing just the tip of the iceberg in a potential rethink on payments. We as investors have seen Square take off at an unprecedented rate (so far) for a payments startup, but in terms of relative scale, even Square is dwarfed by Mpesa — it is 20% of Kenya’s GDP already (using a totally different model than Square). Meanwhile in India, their UID system could remake the concept of “cash”. Feel free to include or exclude payments and even next-generation currency from the “new new” categories that are emerging. Diablo 3, a next-generation role-playing game from Blizzard, will be the first game to have a double-world auction house: you can use real-world or in-game currency to sell and buy items. Is this another sign of new currencies, or is it just a fancy loyalty program which gets you to buy more—the reincarnation of airline miles?

    Facebook has validated another category I haven’t mentioned, “Timeline”, and others are looking at “health timelines.” This is a feature that will show up everywhere and, to me, is more of a tool than an application. There will also be technology services like Singly and Dropbox that allow applications with new utility and features to be built. NFC may also just end up as a basic service technology, but I listed it above in the hope that it enables a new class of applications. There are probably other universal features that will initially look like applications.

    Then there is the Maker movement. Makers are enthusiasts who hack and modify the world around them in interesting and whimsical ways. Tools and services that used to be inaccessible to all but large manufacturers are now available to everyone. Foreign factories that were impenetrable before are now an email away. Design software costing thousands of dollars per seat is freely available (or very cheap). Hackers are mixing all of these elements together and re-imagining entire industries from the ground up.

    As with technology movements before it, the Maker movement has laid the groundwork for what will be the next industrial revolution based around personalized fabrication from one-off runs with 3-D printers to at-scale manufacturing. I am not yet sure that this will be a category in the next 2-3 years, but it will happen sometime. I do want my sofa custom-made for the size of my living room, in custom colors, and maybe a custom design while cutting out all the expensive intermediaries in the supply chain. As an example, I recently came across an intriguing example of crowdsourced design for custom vehicles and automotive parts by Local Motors.

    While talking about new tools or technologies I would be remiss if I didn’t mention a category of entrepreneurs I find particularly intriguing: “The under 25” who don’t know what they don’t know, mostly have not worked at what traditionalists would call a “real job” and are not afraid to try new things. They are often most creative in their thinking and willing to try things and tolerate failure. Peter Thiel’s “20 under 20” is an extreme example of this as are the many Y Combinator startups. I’m very excited about what the next few years will bring — the rate of change is accelerating and the possibilities are endless!


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    TechCrunch / Will we need teachers or algorithms? Mon, 16 Jan 2012 04:36:47 +0000 This post also appears on TechCrunch

    Editor’s note: This is Part III of a guest post written by legendary Silicon Valley investor Vinod Khosla, the founder of Khosla Ventures. In Part I, he laid the groundwork by describing how artificial intelligence is a combination of human and computer capabilities In Part II, he discussed how software and mobile technologies can augment and even replace doctors. Now, in Part III, he talks about how technology will sweep through education.

    In my last post, I argued that software will take over many of the tasks doctors do today. And what of education? We find a very similar story of what the popular – and incredibly funny! – TED speaker Sir Ken Robinson calls “a crisis of human resources” (Click here for the RSA talk from the same speaker which has been animated in a highly educational fashion). At the TED 2010 conference, he stated that “we make poor use of our talents.” Indeed, in the same way that we misuse the talents and training of doctors, I believe we misuse the talents and training of teachers.

    I want to comment on what I consider a far greater misuse of talent and training: that of our children/students, mostly here talking about high school education. We have focused so much of our education system on children attending primary school, then middle school, then high school, all with the objective of attending university. This is a progression that still remains unchanged and largely unchallenged. Yet, this system is completely linear and, most tragically, unwaveringly standardized not only through instruction methods, but also through testing. Worse, it is mostly what I call “fixed time, variable learning” (the four-year high school) instead of “fixed learning, variable time” to account for individual students’ capabilities and status.

    Identifying Emerging Trends In Education

    There are new key trends that I see emerging in education enabled by advancing technology: namely decentralization and gamification. By understanding these trends, it is much easier to imagine why we won’t need teachers or why we can free up today’s teachers to be mentors and coaches. Software can free teachers to have more human relationships by giving them the time to be guidance counselors and friends to young kids instead of being lecturers who talk at them.  This last possibility is very important—in addition to learning, schools enable critical social development for children through teacher student relationships and interacting with other children—classrooms of peers and teachers provide much more than math lessons.  And by freeing up teachers’ time, technology can lead to increased social development rather than less as many assume.

    Still, nearly all the attempts at technology in education have mostly failed so far, but I doubt they will continue to fail. I believe the failures have been failures of tactics rather than failures of strategy. In other words, just because some social networking sites like Friendster and Myspace failed does not mean that all social networking sites (like Facebook) will fail!

    Let’s start with decentralization, which involves not only making content available online but also producing content that is interactive and mobile. It’s encouraging to me that we are starting to seriously experiment with content that is different than linear translations of books to online. With the new platforms, we have the ability to rapidly run experiments with new styles, techniques and resources (like social learning) which will lead to a new understanding of education.

    At a very simple level, organizations like Khan Academy are making up for students who have bad teachers by starting with good lectures on every topic. And it seems to be working; hundreds of thousands of students are already accessing these videos, making up for what is lacking (likely from their “average teacher” – on the other hand good teachers, the top 20%, like great doctors, will always be in demand, and though each of us can tell stories about an awesome teacher, anecdotal counterexamples to my assertions are not “statistical proof” of the general quality of teachers). Meanwhile organizations like my wife’s are making the basic content for high school education free and continuously improving (because they are open source).

    This decentralization does not have to benefit only the students, though. Coming next from CK12, early in 2012, for example, will be lesson plans for teachers to access, “bionic software” to help them assess their students (Khan is also adding this to their system). The CK12 system in 2012 will also allow for students to teach themselves from a concept map of all 5000 or so concepts that each student needs to know to qualify to get into MIT or Stanford (the number of concepts depends on granularity and is mostly semantics). CK12 will allow teachers to guide individuals or for students to guide themselves while being aligned with state (or country) curriculum requirements using any of several different learning modalities (text, video explanations, experimentation, labs, playing with Flexmath, simulations, Q&A bank for students or teachers to self-test, social Facebook-like help for students, and teachers and much more). Systems such as these will enable near universal learning (again with some exceptions). There are numerous other examples.

    The important thing is not the specific first instantiations of these systems but that they offer a customizable playground for low-cost experimentation.  Today, to try a new experiment in education in the US means starting a new school, training new teachers and taking years and tens of millions of dollars. My hope is that environments like that of (and I see many more bubbling up, too numerous to mention here) will decrease the cost of experimentation and hence dramatically increase the amount of experimentation. This will result inaccelerated innovation in education well beyond anything that has happened in the past.

    The universal availability of inexpensive web access devices like tablets and smartphones and new trends like gamification and social software will surely add to the acceleration. Meanwhile the ability to collect data online, at a scale not possible in traditional systems will help us better understand student behavior. When every click and every hesitation at every stage of every reading, assignment or problem is available to analyze with big data techniques, we will finally understand at an exponentially faster rate what works and what does not.

    The other trend I am excited about is gamification. When parents think of games, they usually consider them a waste of time. More importantly, they consider them a waste of talent. The debate about the place of games in learning rages on, but one aspect of gaming is unequivocally clear: it’s sticking around. Therefore, I firmly believe that we should embrace it and harness its best parts to drive the education of our children who grow up with online and mobile games. And I really mean, grow up with it! In a NYT article also from last year, according to research by the Joan Ganz Cooney Center, 60 percent of the top-selling iPhone apps on the education store are made for toddlers and preschoolers. Do we expect these children to relinquish and forget their app- and game-centered development after they get to first grade? This is completely unreasonable! And for me it is easy to envision how we can make education more engaging with these approaches, hence enhancing learning at all levels be it kindergarten or medical school. There is sufficient early evidence to suggest these assertions will be proven correct. I am a fan of views like those of Jane McGonigal whose  #1 goal in life (quoting her website) is to see a game designer nominated for a Nobel Peace Prize because of the impact game design can have on humanity.

    I am particularly excited about the possibilities when high school education moves from teachers talking uniformly to bored A students and clueless D students, fifty to a class, to individual, gamified, and adaptive-difficulty systems, that leverage our social inclinations as demonstrated by Facebook. Imagine friends helping us understanding subjects while they also understand our context.  Both the students helping and the ones being helped are likely to understand the subject matter better in my view.  And with points and stars and badges and the like both are likely to want to spend more time participating, and will be more motivated when they do participate compared to today’s average classroom. Add reputation systems to that and one has the beginnings of a revolution. The content to train the trainers will be produced by some of the top 20% of teachers, and over time technology will multiply the impact and reach of these top teachers, motivating the rest of the best to participate as well. Other motivated teachers can feel free to jump in while the rest can go enjoy their favorite TV show.

    Envisioning Future Education

    Can you imagine an educational platform like CK12 version 9.0 in ten years, for example, with the excitement-generating, attention-grabbing, and skill-building potential of a Zynga game times ten? Can you imagine an environment based around a game? The awkward early prototype example of this (that will get much better in its multi-generational evolution) isQuest to Learn. Rather than pushing education on its students, the teachers pull the students into education through a game-like progression exploring 21st-century skills such as code-based problem solving, social media generation and integration, and design through games. The beginnings of  these future trends of educational institutions and platforms are, therefore, already in place.

    One other critical piece in my vision of the future is (re)-discovering the potential of each student as just that – a student. Pioneering social experiments such as Hole in the Wall have shown us once more in explicit terms the incredible ability of children to learn if self-motivated. Children who have never seen – much less operated! – a computer, were able to learn how to browse the web, play games, learn the basics of a foreign language, and read manuals to the software in the computer. All of this within the timeframe of less than three months. Most of these tasks, they accomplished within hours of playing around with the machine!

    More importantly, they were then able to teach themselves and others in their community. Children have the natural ability to learn and teach. With socialization, big data analytics and gamification as helpful tools, the future of education lies in providing children with an environment in which they can learn in their own way, at their own pace, and their preferred style/methodology/modality. I suspect they will still be able to meet any state or university curriculum standards. I could even imagine each university defining its own standards, providing the ultimate customization that no typical school today could. We may not need as many doctors as we have today but I suspect there is still a major role for the 80% of teachers who are not in the top 20%. They can provide the “human touch” and be mentors and coaches. Maybe teaching will become interesting enough to attract more teachers!

    So is it possible to imagine solving the healthcare and education problems without doctors and teachers in their traditional roles within a decade or two or three? (Timing is always far off and the technologists always over-estimate the near term while underestimating the long-term because of the exponential nature of progress that builds on each previous step). As I’ve mentioned before, if computers can drive cars and master all the knowledge required to winJeopardy, then surely it won’t be long before they will be able to diagnose disease and teach high school. With more and more data, these teaching and healing algorithms will keep improving and will free up human teachers and doctors to do what they do best.

    Technology can allow us to make better use of our natural human resources, be they related to our health or to our education. Empowering patients to understand themselves better through continuous and comprehensive data and enabling students to develop themselves through accessible and attractive environments…this is the future I see. And if I can see it from these emerging trends, the key takeaway, then is, this: if we can see it, we can most certainly grasp it. All we need to do to reach this future is to invent it.

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    TechCrunch / Do we need doctors or algorithms? Wed, 11 Jan 2012 04:33:51 +0000 This article is also posted on TechCrunch.

    Editor’s note: This is Part II of a guest series written by legendary Silicon Valley investor Vinod Khosla, the founder of Khosla Ventures. In Part I, he laid the groundwork by describing how artificial intelligence is a combination of human and computer capabilities. In Part III, he will talk about how technology will sweep through education.

    I was asked about a year ago at a talk about energy what I was doing about the other large social problems, namely health care and education. Surprised, I flippantly responded that the best solution was to get rid of doctors and teachers and let your computers do the work, 24/7 and with consistent quality.

    Later, I got to cogitating about what I had said and why, and how embarrassingly wrong that might be. But the more I think about it the more I feel my gut reaction was probably right. The beginnings of “Doctor Algorithm” or Dr. A for short, most likely (and that does not mean “certainly” or “maybe”) will be much criticized. We’ll see all sorts of press wisdom decrying “they don’t work” or “look at all the silly things they come up with.” But Dr A. will get better and better and will go from providing “bionic assistance” to second opinions to assisting doctors to providing first opinions and as referral computers (with complete and accurate synopses and all possible hypotheses of the hardest cases) to the best 20% of the human breed doctors. And who knows what will happen beyond that?

    Assessing Current Healthcare

    Let’s start with healthcare (or sickcare, as many knowledgeable people call it). Think about what happens when you visit a doctor. You have to physically go to the hospital or some office, where you wait (with no real predictability for how long), and then the nurse probably takes you in and checks your vitals. Only after all this does the doctor show up and, after some friendly banter, asks you to describe your own symptoms. The doctor assesses them and hunts around (probably in your throat or lungs) for clues as to their source, provides the diagnosis, writes a prescription, and sends you off.

    The entire encounter should take no more than 15 minutes and usually takes probably less than that. Sometimes a test or two may be ordered, if you can afford it. And, as we all know, most of the time, it turns out to be some routine diagnosis with a standard treatment . . . something a computer algorithm could do if the treatment involved no harm, or at least do as well as the median doctor (I am not talking about the top 20% of doctors here—80% of doctors are below the “top 20%” but that is hard for people to intuit!).

    • So what’s wrong with this situation? This is by no means an exhaustive list, but it sets up a nice springboard:
    • Physically having to go to your doctor’s office makes sense for the most part, except that a lot of the basic tests are either visual (tongue and throat check) or auditory (listening to the breath and vibrations in the abdomen). Time plus cost will often discourage people from taking that first step to visit a doctor. Most of the time a Dr. A could at least advise you when it is worth visiting based on your normal body functions, your current indications, and your locality’s current infections and other symptom trends.
    • A lot of the vitals being tested for (e.g. blood pressure, pulse) can now be routinely done at home or even with the help of an iPhone and an explosion of additional possibilities will emerge in the next decade.
    • You are the one telling the doctor your symptoms.
    • The doctor has to inquire (probably every time) into any possible history of each symptom, test results, and illnesses, except when he does not have time for you in that village in India.
    • The prescriptions are still done on paper, requiring you to, again, physically go to a pharmacy and pick up what you need there. So compliance is an issue.

    Looking at this, I cannot help but think that this is a completely antiquated system (regardless of whether it is healthcare or not)!

    Going down the list, we find a pretty negative assessment. The vital signs could all be determined with the help of mobile devices, the operation of which do not require years of training and a certification. You will be able to do this by yourself—Philips already is using the iPhone camera to try to measure vital indicators, others will be even more innovative and as an insurance company it would be cost-effective to give them to every insured person for free. Skin Scan is measuring your risk of skin cancer from a photograph of a skin lesion. Telemedicine is accelerating and a Qualcomm company is measuring heart rates using an iPhone. Cell phones that display your vital signs and take ultrasound images of your heart or abdomen are in the offing as well as genetic scans of malignant cells that match your cancer to the most effective treatment. Ear infection and skin rash pictures and more will all be mobile phone based, often supplemented by the kind of (fractal) analysis that Skin Scan does, and more than what the doctors naked eye could usually see.

    The history of symptoms, illnesses, and test results could be accessed, processed, and assessed by a computer to see any correlation or trends with the patient’s past. You are the one providing the doctor with the symptoms anyway after all!

    Any follow-up hunts for clues could again be done with mobile devices. The prescriptions—along with the medical records—could relocate to electronic and digital methods, saving paper, reducing bureaucracy, and easing the healing process. If 90% of the time the doctor knows exactly the right kind of diagnosis from these very few and superficial inputs (we haven’t even considered genetics yet!), does it really require 10+ years of intense education for every diagnostician?

    The fault is not entirely with the doctors, though. Most of us don’t know what set of symptoms warrant the full-scale attention of medical personnel, so we either go all the time or we do not go at

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    all (save for emergencies). We also cannot realistically expect any (even our family) doctor to remember every single symptom and test result over the years, definitely not in a government hospital in China. Similarly, we cannot expect our doctor to be able to remember everything from medical school twenty years ago or memorize the whole Physicians Desk Reference (PDR) and to know everything from the latest research, and so on and so forth. This is why, every time I visit the doctor, I like to get a second opinion. I do my Internet research and feel much better.

    Identifying Emerging Trends In Healthcare

    But I always wonder why I cannot input my specific test numbers and have a system offer me a “second opinion” on the diagnosis since it has all the data that the doctor has and can use all my current and historical data effectively. In fact, it is not hard to imagine it having more data than the doctor has since my full patient record would be at the tip of its digital brain, unlike the average doctor who probably doesn’t remember my blood glucose levels or my ferritin from two years ago. He does not remember all the complex correlations from med school in which ferritin matters—there are three thousand or more metabolic pathways, I was once told, in the human body and they impact each other in very complex ways. These tasks are perfect for a computer to model as “systems biology” researchers are trying to do.

    Add to it my baseline numbers from when I was not sick, which most doctors don’t have and if they did 80% of physicians would be too lazy to use or not know how to use. Applied Proteomics can extract tens of gigabytes of proteomics—what my genes are actually doing instead of what they can do—baseline data from one drop of blood. Oh, by the way I have my 23andMe data to add my genetic propensities (howsoever imprecise today, but improving rapidly with time and more data). The doctor uses a lot of imprecise judgments too as most good doctors will readily admit. My very good doctor did not check that I have relative insensitivity, genetically, to Metformin, a diabetes drug. It is easy to input the PDR (the Physicians Desk Reference), the massively thick, small-font book that all physicians are supposed to know backwards and forwards. They often don’t remember everything they read, in med school but it is a piece of cake for computers. The book on your typical doctor’s desk is probably not current on the leading-edge science either. Confirmed science and emerging science are different things and each has a role. Doctors mostly use confirmed science, the average doctor not understanding and pros and cons of each or the expected value of a treatment (benefit and harm). And our 18th century tradition of “first do no harm” dictates that if a treatment hurts ten patients a year but saves a thousand lives we reject it.

    With enough examples, today’s techniques for language translation (or newer techniques) can translate from human lingo for symptoms (“I feel itchy” or “buzzy” or “reddish bubbly rash with pimples” or “less energy in the morning” or “sort of a stretch in my tendon” and the myriad of imprecise ways symptoms are described and results interpreted — these are highly amenable to big data analysis) into medical lingo matching the PDR. With easy input of real medical results into a computer and long-standing historical data per patient and per population, which a human cannot possibly handle, and patient and population genetics, I suspect getting a second opinion of my diagnosis from Dr. A is a reasonable expectation, and it should certainly be better than a middling physician’s (especially in less developed countries like India, where there is a dire shortage of trained physicians).

    I may still need a surgeon (though robotic surgeons like those from Intuitive Surgical are on the way too) or other specialists for some tasks for a little while and the software may move from “second opinion” (in three years? Or seven?) to “bionic software” for the physicians (in five or ten years, with enough patient data?). Bionic software, again, defined here as software which augments and amplifies human understanding.

    But I doubt very much if within 10-15 years (given continued investment and innovation and keeping the AMA from quashing such efforts politically) I won’t be able to ask Siri’s great great grandchild (Version 9.0?) for an opinion far more accurate than the one I get today from the average physician. Instead of asking Siri 9.0, “I feel like sushi” or “where can I dispose a body” (try it…it’s fairly accurate!) and with your iPhone X or Android Y with all the power of IBM’s current Watson computer in the mobile phone and an even more powerful “Nvidia times 10-100” server which will cost far less than med school with terabytes or petabytes of data on hundreds of millions (billions?) of patients, including their complete genomics and proteomics (each sample costing about the same as a typical blood test).

    IBM’s Watson computer, I understand, is now being applied to medical diagnosis after handling imprecise and vague tasks like winning at Jeopardy, which experts a few years ago would have said could not be done. “Computers cannot match the judgment of humans on these kinds of tasks!” And with enough data, medical diagnosis or 90% of it is an easier task than Jeopardy.

    Already Kaiser Permanent already has 10 million real-time medical records with details of 30,000,000 e-visits last year with caregivers and computer modeling of key diseases per individual that data scientists would love to get their hand on. Already, according to IDC 14% of the US population is using their phones for medical help and 200 million health and fitness related mobile applications have been downloaded according to pyramid research. Fun stuff, though early. They are probably two generations away from systems that are actually useful.

    A more elaborate vision, one that is not very useful today because of lack of enough data and enough science, is defined in Experimental Man and websites like Quantified Self. Though they feel like toys today, they are much further along than the mobile phone was pre-iPhone in January of 2007. And data, the key ingredient to useful analysis, and diagnosis, is starting to explode exponentially—be it genetic data, proteomic data or physical data about my steps, my exercises, my stress levels or my normal heart and respiration rates.

    My UP wristband or something like it (disclosure: I am an investor in Jawbone)) will know all my sleep patterns when I am healthy and how many steps I take each day and may have more data on my mobility if I ever get depressed than any psychiatrist ever will know what to do with. Within a few years, my band will know my heart rate at all times, my respiration rate, my galvanic skin resistance (one parameter among multiple ones used to measure my stress level), my metabolic rate (should cost about $10 to add to the band by measuring my CO2 in my breath and may detect changes in my body chemistry too like when I get a certain type of cancer and traces of it show up in my breath).

    All my “health data” as well as my “sick data” and my “activity data” will be accessible to Dr. A (and location when I was stressed or breathing hard or getting the allergic reaction and what chemicals were nearby or in the air—did toluene exposure cause me to break out in a rash from that new carpet or trigger a systemic reaction from my body?). I doubt I will be prescribed an arthritis medicine without Dr. A knowing my genetics and the genetics of my autoimmune disease. Or a cancer medicine without the genetics of my cancer when the genetic sequence (once per life) costs far less than a single dose of medicine. In fact all my infectious disease treatments may be based on analysis of my full genome and my history of exposure to viruses, bacteria and toxic chemicals.

    Constant everyday health data from non-medical devices will swamp the “sickness tests” used in most medical diagnosis and be supplemented by detailed genetic, proteomic and sick data with bionic software and machine learning systems. Siri might even remind me one day that my heart rate while sleeping has gone up abnormally over the last year, so I should go run some heart sickness cardiograms or imaging tests. Obviously, Siri’s children and its server friends will be able to keep up with the latest research and decide on optimal strategies based on patient preference (“I prefer to live longer even if it means all the fancy treatments” or “I want to live a normal life and die. I prefer to spend more of my time with my children than at the hospital” or “I like taking risky treatments”). They will take into account known research, early pioneering approaches, very complex interrelationships and much more.

    My best guess is that today a physician’s bias makes all these personal decisions for patients in a majority of the cases without the patient (or sometimes even the physician) realizing what “preferences “ are being incorporated into their recommendations. The situation gets worse the less educated or economically less well-off the patient is, such as in developing countries, in my estimation.

    Envisioning Future Healthcare

    Eventually, we won’t need the average doctor and will have much better and cheaper care for 90-99% of our medical needs. We will still need to leverage the top 10 or 20% of doctors (at least for the next two decades) to help that bionic software get better at diagnosis. So a world mostly without doctors (at least average ones) is not only not reasonable, but also more likely than not. There will be exceptions, and plenty of stories around these exceptions, but what I am talking about will most likely be the rule and doctors may be the exception rather than the other way around.

    However fictionalized, we will be aiming to produce doctors like Gregory House who solve biomedical puzzles beyond our best input ability. And India, China and other countries may not have to worry about the investment in massive healthcare or massive inequalities in the type of physicians they might have access to. And hopefully our bionic software (or independent software someday) will be free of the influence of heavily marketed but only minimally effective drugs or treatment regimes or branding campaigns against generics or lower-cost and equally effective, more affordable drugs and treatments. Dr. A will be able to do a cost optimization too both at the patient level and at the policy level (but we may choose, at least for a decade or two, to reject its recommendations—we will still be free to be stupid or political).

    What is important to realize is how medical education and the medical profession will change toward the better as a result of these trends. The vision I am proposing here, though, is one in which those decades of learning and experience are used where they actually matter. We consider doctors some of the most learned people in our society. We should aim to use their time and knowledge in the most efficient manner possible. And everybody should have access to the skills of the very best ones instead of only having access to the average doctor. And the not so “Dr. House’ doctors will help us with better patient skills, bedside manners, empathy, advice and caring, and they will have more time for that too. If computers can drive cars and deal with all the knowledge in jeopardy, surely their next to next to next…generation can do diagnosis, treatment and teaching in these far less uncertain domains and with a lot more data. Further the equalizing impact of both electronic doctors and teaching environments has hugely positive social implications. Besides, who wants to be treated by an “average” doctor? And who does not want to be an empowered patient?

    The best way to predict this future is not to extrapolate the past and what has or has not worked, but to invent the future we want, the one we believe possible!

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    TechCrunch / The surprising path of artificial intelligence Tue, 10 Jan 2012 06:22:26 +0000 This post also appears on TechCrunch.

    I read the following in a NY Post article last year by Google’s research chief Peter Norvig:

    Forty years ago this December, President Nixon declared a war on cancer, pledging a “total national commitment” to conquering the disease. Fifty years ago this spring, President Kennedy declared a space race, promising to land a man safely on the moon before the end of the decade. And 54 years ago, Artificial Intelligence pioneer Herbert Simon declared “there are now in the world machines that think” and predicted that a computer would be world chess champion within 10 years.

    Though we made it to the moon the efforts in cancer and artificial intelligence have failed in their larger ambitions but have made progress. In cancer:

    Those hoping for a single “cure” were disappointed because cancer turned out to be not a single problem but a complex arrangement of inter-related problems on which we continue to make incremental progress.

    Artificial intelligence turned out to be more like cancer research than a moon shot. We don’t have HAL 9000, C-3PO, Commander Data, or the other androids imagined in the movies, but A.I. technology touches our lives many times every day…

    A.I. touches our lives in the form of chess computers that are better than most humans, computers beating the best humans at Jeopardy, intelligent ad targeting, Microsoft Kinect recognizing human motion and even amazingly, Google’s self-driving car that drove itself from San Francisco to Los Angeles. Intelligent systems can even do transactions involving judgment like investing on Wall Street (a former MIT mathematician is now a hero on Wall Street with one of the best performing investment funds for many years in this judgment-based domain) and of course Siri’s conversational interface that does what you ask (mostly—think of Gen 1.0 as a high-IQ three-year old getting better with each passing year). Computer Jeopardy champions, self-driving cars and Siri-like conversational interfaces would have seemed very hard a few years ago.

    Rather than the brute force logic-based development that was envisioned with Commander Data, successful systems have been built from examples rather than logical rules.  We essentially let the computer “figure it out” using lots of past problems and solutions that include probability assessment systems beyond any hard-coded rules. Reasoning under uncertain conditions underlies a major area of recent progress.

    Where will these advances in computing lead us in the next decade? A few other thoughts are worth adding:

    i) a post on bionic software defined as one that combines the biological and mechanical systems to create an enhanced system that is more powerful than either alone. “Bionic software,” in this sense, is the interplay of humans and computers augmenting each other’s actions and amplifying one another’s understanding (for a while at least, they can help and complement each other);

    ii) a recent Forrester assessment that the iPad 2 in 1993 would be considered one of the top 30 most powerful computers on the planet and similar to a Cray supercomputer from 1986.

    iii) An Nvidia graphics chip designed primarily for video games today can be assembled into a five teraflop machine for less than $25,000 and can happily run powerful new programs (among many other types) called “self organizing machines” that determine the how (algorithms for geeks) if told the “what” (examples of right/wrong medical diagnosis or fraudulent transactions or unusual patterns of behavior or symptoms, for example).

    iv) finally, the fashion in big data in the venture capital business has injected a lot of new energy and exploration for using experts and expert systems, probability and statistics, machine learning, self organizing machines and many less-discussed and some yet-undisclosed systems. (Those stock traders seldom talk about what their computerized trading systems do, nor do the spooks or Google in its spam filtering algorithms). Data, and big data especially hold “truths & likely correlations” well beyond the biases of your average doctor, and unaffected by the distortions of pharmaceutical marketing and selective medical study reporting, or a desire to make more money, or other intentional and unintentional human failings.

    These are all incredible achievements in and of themselves, but the challenge for us now is to find their logical synthesis in the marketplace of ideas and convergence in the flow of time.  In other words, so what?  With this blog post series, I’m exploring a few of the things that I think come out of this.

    Quoting another writer:

    You probably hate the idea that human judgment can be improved or even replaced by machines, but you probably hate hurricanes and earthquakes too. The rise of machines is just as inevitable and just as indifferent to your hatred.

    My two bits: it will improve health care and education, especially for those who can least afford it, and make the world a more humanitarian place. And no, your typical doctor or teacher may have a better, more human role being a mentor, friend and advisor, at least for a while. They will have more time for you.


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    Harker Research Symposium / Failing to succeed Mon, 02 Jan 2012 06:27:08 +0000 In this video, hear from Vinod Khosla as he discusses why failure leads to success.  



    Harker research symposium

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    Rocketspace / Insights for entrepreneurs Mon, 02 Jan 2012 03:48:33 +0000 In this video, hear from Vinod Khosla as he talks about entrepreneurship.



    Rocketspace Q&A with Vinod Khosla: Insights for entrepreneurs

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    Guide for performance management Sun, 01 Jan 2012 08:45:14 +0000 Why do Performance Reviews?

    • It is important to decide how you will provide employees feedback and assess performance in a way that is fair, sound and consistent. Even if you decide to not conduct a formal performance management process, you do want to provide regular on-going feedback and avoid situations where the employee is surprised at how their performance is viewed.
    • Feedback (both positive and course correction) is an important part of managing the performance of individuals and/or the team. It’s how you reinforce the desired behaviors and provide course corrections for the behaviors you want to improve.
    • The goal is to create an environment of continuous feedback – up, down and across the organization.
    • The purpose of a formal performance review is as a “forcing mechanism” to ensure feedback is happening and to be at a point in time to review overall performance for a specific period.
      • It’s an opportunity to recognize and reinforce great performance
      • It can (but doesn’t have to be) be tied to determining compensation…
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    The enterprise sales learning curve Wed, 21 Dec 2011 01:29:00 +0000 “It always takes longer and costs more,” laments Don Valentine of Sequoia Capital, one of the most successful and  respected venture capitalists today. This is consistent with our own extensive involvement in entrepreneurial companies over the past twenty-five years where it is the truly rare company that meets or exceeds its initial plans. The large majority miss the timing of their revenue ramp and require more capital than originally planned to achieve cash flow breakeven operations. When established companies release their first product in a new category (for them), they often face the same challenges.

    Twenty-five years ago the principal risk in creating a new company (or for an established company launching a new product initiative) was in the feasibility of the new technology. Underlying this was the belief that “if we build it, they will come.” Today, with much more robust development tools and many more sub-components available, the development of most new products is reasonably predictable. In a much more competitive world the risk has moved instead to the go-to-market stage, which typically begins upon the completion of the beta version of the product. The old assertion has become the new question: “When we build it, will anyone come?” Uncertainty surrounds decisions on the number and timing of resources to deploy and the resulting time and cost it will take to make it through this stage. It usually results in an overinvestment in sales, disappointing revenues and excessive consumption of cash.

    When companies introduce new products they experience broad-based learning in the areas of product definition, market definition, and sales process. The Enterprise Sales Learning Curve (ESLC) relates this learning to the productivity of a fully effective, trained sales person, and describes how yields increase as learning occurs. This is illustrated in Figure 1 below. The ESLC provides a framework that can help managers and investors develop thoughtful strategies, plan more accurately, set more appropriate expectations and reduce the investment in time and money required to achieve profitable operations. Like all learning curves it captures the fact that processes and functions become more efficient over time. Failure to understand and take advantage of this can cost companies money, time and perhaps their existence. The problems companies face when the ESLC is not understood is that they have a revenue gap illustrated by the area between the assumed curve and the actual curve…

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    The innovator’s ecosystem Fri, 02 Dec 2011 06:49:04 +0000

    A tweet I saw recently showcases the mindset of the innovators that will lead this charge for change: “Cynics never do the impossible, achieve the improbable, take on the inadvisable. Hope is only path to extraordinary success.” Tweeting is an innovation few could have seen or defined: who would have thought a few years ago that millions of people would follow messages in 140 characters? And who would have thought that they could tell the mood of the nation? Or reveal the culture of a city, avoid traffic, sense the stirrings of a revolution, predict the financial markets, detect and map natural disasters, predict the popularity of people, technologies and goods….I could go on forever! For the longest time, I have thought of innovation and its partner, entrepreneurship, as about “those who dare to dream the dreams and are foolish enough to try and make these dreams come true.” And foolishness is a key ingredient of both innovation and entrepreneurship. Martin Luther King said “human salvation lies in the hands of the creatively maladjusted” and George Bernard Shaw echoed “all progress depends upon the unreasonable man.” It is this kind of creativity, innovation, and risk-taking that represents the fundamental driver behind economic, cultural, and social progress. There is absolutely no mistake as to why the United States led the world for the second half of the 20th century, and why it is also home to the most entrepreneurs, new business, and revolutionary technologies per capita…

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    NASSCOM / Inventing the future Thu, 10 Nov 2011 05:55:25 +0000 In this keynote at NASSCOM, hear from Vinod Khosla as he discusses the trends that will shape the technology industry in the next decade and what it means to India.



    What gets Vinod Khosla excited even after 30 extraordinary years

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    FailCon / Fireside chat with Vinod Khosla Wed, 02 Nov 2011 02:06:23 +0000 In this video, Vinod Khosla discusses failure as a tool. 



    FailCon 2011: Khosla Fireside chat

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    Forbes / Black swan thesis of energy transformation Thu, 22 Sep 2011 04:56:52 +0000 In this video, Forbes’ journalist, Kym McNicholas, talks with Vinod Khosla as he discusses ignoring experts, failure and the black swan thesis of energy transformation, among many other topics. 



    Vinod Khosla’s ‘fail’ strategy

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    Black swan thesis of energy transformation Mon, 29 Aug 2011 02:39:17 +0000 The looming twin challenges of climate change and energy production are too big to be tackled by known solutions and time-­‐honored traditions. Incremental remedies are fine for incremental problems, but they are insufficient for monumental, potentially life-­‐altering threats, which need to be approached with a disruptive mindset. There are 5 billion people coveting the energy-­‐rich lifestyles currently enjoyed by 500 million people, mostly in the developed world. Incremental technology progress will not satisfy this craving. We need non-­‐linear jumps in technologies – Technological Black Swans!1 We can invent these future technologies.

    Environmentalists have done a superb job identifying the problem, but often push impractical idealistic solutions at high cost or inconvenience to consumers. I believe that capitalism and self-­‐interest driven models of new technology adoption are the lowest risk way to achieve a low carbon social infrastructure and plentiful energy. The solution cannot be pushed by legislation or governments; it must be pulled into the market by consumers, corporations and aided by encouraging policy. The environmentalist solution is often one of “deploy the technologies we have as quickly as possible” combined with idealized hopes that the business community will start to value un-­‐priced environmental and health externalities.

    These thoughts are noble, and occasionally work, but distract from our best “broad” hope: robust unsubsidized market competitiveness of “green” technologies against their fossil competitors. This should be the mantra and goal of Black Swan technology development. After all, the logic of business is to externalize as many costs (like using public roads or not reducing emissions) and maximize profits, as it should be. “Green” should be a feature that follows – rather than defies – the “laws of economic gravity,” which in essence declares that economics trump everything when it comes to mass adoption of a technology. In fact, the mindset of clean energy always costing more can be turned completely on its head in many, even most, areas; economic energy-­‐focused innovations could save consumers hundreds of billions over the next 10 to 15 years!

    My basic thesis is that investment in true innovation is the key to reinventing the infrastructure of society and enabling 5+ billion people to sustainably live the energy affluent lifestyle that 500 million enjoy today. While there is no shortage of existing technology providing incremental improvements – whether today’s thin film solar cells, wind turbines, or lithium-­‐ion batteries – even summed, they are not likely to address the scale of our problems. While these technologies will continue to improve and sometimes this incremental ecosystem will result in products compliant with the laws of economic gravity, such as wind in certain locations or lithium-­‐ion batteries in certain applications, I suspect this will not be enough. Regulation and clever accounting will help many pundits justify and push these technologies, but in order to drive the necessary resource multiplication, we need to (and can) reinvent the infrastructure of society through the creation of Black Swan energy technologies.

    These Black Swans are technologies that are market competitive without subsidies once scaled, and hit the Chindia price point (the price at which people in India and China will willingly purchase without subsidy) while providing sufficient scale to have measureable impact. They may have up to a 90% chance of failure, but if they succeed, everything changes. Ironically, many appear to have a high probability of failure mostly because they have not been given sufficient scientific focus. Because of this, the skeptical questions such as “wasn’t this tried before?” or “why now?” keep many people from even trying.

    Author Nassim Taleb defines a Black Swan event as (1) an outlier—it lies outside the realm of traditional expectations in that evidence from the past did not predict the future event; (2) it carries a significant impact; and (3) in spite of its outlier status, it is justified by explanations that are derived and accepted after the fact. To summarize, “rarity, extreme impact, and retrospective (though not prospective) predictability.” So these technological Black Swans engender shocks that have retrospective, but not prospective, predictability and material impact in at least one large domain. So-­‐called once in a hundred year events actually happen all the time! There is a lot of error in estimating tail probabilities and they tend to be systematically underweighted, particularly in complex systems.

    Thus, with several thousand Black Swan technology “shots on goal,” where most predict that each individual shot will fail, I predict we’ll see at least 10 incredible successes. Together, they will completely upend assumptions in oil, electricity, materials, storage, agriculture and the like. Improbable is not unimportant in my view. In fact, very likely, the most successful technologies will be the ones considered improbable, not those known to be safe and incremental. While the world expects lithium-­‐ ion batteries to get better, the most prevalent battery by 2020 to 2025 may be what I call a “quantum-­‐ nano-­‐thingamajigit” battery that is 10 times cheaper and 10 times more energy dense. Technically it may not even be a (chemical) battery, but rather another sort of electricity storage device. This is the essence of the Black Swan thesis of energy transformation!…

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    Accelerating climate change or climate progress? Wed, 24 Aug 2011 12:50:46 +0000 Climate change is a substantial risk, and the risk of global inaction is real. In the long-­‐term, for rapidly developing nations, carbon intensity targets are more feasible than absolute carbon caps. In the near-­‐term, technology-­‐driven carbon reduction capacity building is more important than absolute carbon reductions.

    Global climate change continues to be a substantial risk. The United States has failed to enact a climate bill and international negotiations, post Cancun, are also struggling. Jonathan Pershing, US negotiator, observed, “some countries are walking back from progress made in Copenhagen, and what was agreed there.” Interestingly, while the international blame-­‐game continues, some countries are accelerating concrete domestic actions designed to unleash broad-­‐scale clean energy innovations. A “race for the clean energy future” is afoot. Meanwhile, driven more by the need for headlines than accurate reporting, the popular media (inaccurately) blames climate change for everything from record-­‐breaking heat waves to epic floods. Away from the noise of the press, the scientific community continues to see mounting evidence of climate change, and more importantly median scientific assessment points increasingly towards amplified negative impact of climate change in the coming decades. Yet the likelihood of policy inaction is increasing rapidly. In our view, an immediate focused assault on climate change is akin to buying insurance to protect against other potential catastrophes such as terrorism (through security investments and military) or nuclear proliferation.

    One must ask, what are the rules governing solutions to the global climate crisis and who makes them? The countries with the biggest bulk and heaviest sticks? Someone’s moral and ethical principles? If so, whose morals and ethics? Do we consider a given country’s ability to pay, its natural resources, and its rate of economic development important to their contribution to solutions? Given the global budget deficits and debt loads, additional spending seems very unlikely. Any solution towards climate risk reduction must necessarily operate within these constraints or be considered a dreamer’s solution. A dose of pragmatism is vital – in most countries, immediate political and economic needs trumps the planet’s needs in the year 2050.

    Technology and economics will be the drivers of any relevant global climate change solutions that get past local interests, national politics and similar barriers to caring for the common good. A dynamic solution is critical; one that responds and morphs as global and regional circumstances change. It will need to dynamically react to costs, practicality of approaches, technology advances, and evolving climate change forecasts. Furthermore, it should include targets and mechanisms that allow developing countries to prosper while incentivizing improved emissions trajectories. The current approach of trying to plan for static targets at some date in the future, independent of changing technology, changing cost estimates or changing willingness to pay are, in my view, unlikely to succeed.

    I have previously advocated the use of carbon intensity of GDP growth over absolute carbon caps. On the “global agreements’ front perhaps the most significant advancement at Copenhagen last December was the adoption of voluntary emissions intensity targets by the largest developing nations: China, India, Brazil, South Africa, Mexico, South Korea, and Indonesia. These “Emissions

    Intensity Targets” represent a dynamic approach to developing a low carbon global economy and reducing emissions to avoid the catastrophic consequences, but don’t penalize countries for rapid GDP growth. In fact, faster growth enables higher levels of investment in new technology, energy efficiency and improved carbon intensity of GDP. Countries which invest in efficiency and improved carbon intensity of GDP reward themselves with increased market competitiveness due to reduced energy costs. These targets also prevent the tragedy of the commons by addressing global carbon, and focus the best minds of each country on the challenge of achieving low carbon prosperity.

    Regardless, creating a low carbon, affluent world will not be free. Given the scale of capital needed, public funding is not enough and private capital (motivated by profit as opposed to “social goodwill”) is essential. The global community can focus on action, instead of rhetoric, by building on commitments made at Copenhagen to prompt fast start funding and support intensity targets by revamping and creating financial instruments that integrate intensity target commitments to ultimately drive clean energy development and deployment.

    To maximize investment impact, we must encourage basic R&D to develop true “Black Swan” technological disruptions: ultra-­‐low carbon technologies which completely change conventional assumptions. These must obey the laws of economic gravity, which state that in order to deploy a technology widely, it must be market competitive unsubsidized against fossil competitors as it approaches scale. This is the only way to reduce the need for public funding, which is scarce in the debt-­‐ridden western world. Many of the world’s cleantech investments to date have been incremental improvements and dead-­‐end technologies aimed at milking preferential regulatory regimes, and will never reach market competitiveness. Instead, we need to take more shots on goal by increasing focus on high risk (and high potential upside) technology development: Black Swans. The key insight is that improbable does NOT equal unimportant provided we take enough shots on goal. Though unlikely that any single shot works, even 10 disruptions out of 10,000 shots will completely upend conventional wisdom, econometric forecasts and most importantly our energy future. In everything from batteries, solar cells, LEDs, wind, and engines, innovation will upend conventional wisdom and forecasts, and will hopefully produce economically driven technology engines of growth, profits and carbon reduction. The direction and timing of innovation is hard to predict, so none of this is ever included in econometric models.

    Ultimately, policy that encourages Black Swans also supports building critical “carbon reduction capacity” technologies that are on a path to at least 80% less carbon intensity than those they replace. Examples include economic carbon sequestration, 80% more efficient ICE drivetrains, biofuels with 80%+ lower lifecycle emissions than gasoline, appliances and lighting that are 80% more efficient, and 80% cheaper storage. If we focus on these rather than deploying marginally economic current technologies, early carbon savings will be lower; however, reductions will rapidly accelerate once these Black Swans are deployed. After all, technologies that start with economic carbon reductions around 50% have a fighting chance of reaching 80% reductions, as opposed to the 10-­‐15% incremental reductions that are typically targeted. We should learn from Craig Venter: he sequenced the human genome faster and cheaper than the government-­‐funded Human Genome Project by designing better tools for sequencing rather than spending his time on brute force sequencing that competitors were pursuing when he started. By building the tools for radical carbon reduction now, this “economic carbon reduction capacity” building will get us to our targets more quickly and cost effectively than the current focus on incremental reductions. Ultimately, some of these technologies will scale and will have declining costs with scale while others won’t scale or won’t have declining costs with scale. This makes decisions tricky…

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    Out of the box: Nuclear power Thu, 26 May 2011 00:19:29 +0000 In this video, hear from John Gilleland, CEO of TerraPower, as he discusses why nuclear energy is essential and how it will raise the quality of living around the world.



    Out of the box

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    Innovation, iteration and risk management Sun, 22 May 2011 02:04:44 +0000 In this video, hear from Will Roach, CEO of Calera, Steve Crane, founder and CEO of LightSail Energy and Jagdeep Singh, CEO of Quantumscape as they discuss innovation, iteration and risk management.



    Innovation, iteration, and risk management

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    Invent the future you want Mon, 16 May 2011 06:32:31 +0000 In this talk at the MIT 100k Entrepreneurship Grand Finale, Vinod Khosla discusses entrepreneurship and how you can invent the future you want.



    Vinod Khosla: MIT 100k BPC 2011

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    TiECON / Investing in the future Sat, 14 May 2011 01:40:34 +0000 In this talk at TiECON, Vinod Khosla discusses energy transformation.



    Vinod Khosla at TiEcon 2011

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    Founder perspectives: The importance of data, details and editorial Wed, 11 May 2011 01:58:19 +0000 In this video, hear from Jack Dorsey, co-founder of Twitter and co-founder and CEO of Square, as he discusses what he’s learned from building both companies (not to mention the story of how his parents met!).



    Founder Perspectives – Jack Dorsey

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    Company building “dozen” Wed, 11 May 2011 01:55:31 +0000 In this video, hear from Vinod Khosla as he provides his perspective on being around entrepreneurial ventures from his perspective as both a founder and investor.



    Company building

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    Design thinking Tue, 10 May 2011 01:49:07 +0000 In this video, hear from Tim Brown, the CEO and President of IDEO, as he discusses how one might apply design thinking more broadly to a business, strategy and organization.



    Design thinking

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    China opportunities Tue, 10 May 2011 01:46:42 +0000 In this video, learn more about China with their growing middle class, status as the number one exporter, not to mention that the country are expected to invest from $600-700 billion in  sustainable energy in the next few years.

    Jennifer Holmgren, CEO of LanzaTech
    Chet Farris, President and CEO of Stion
    Don Runkle, CEO of EcoMotors
    Carmen Chang, Partner at Wilson Sonsini



    China opportunities

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    Best practices: Building a board book Tue, 10 May 2011 01:33:42 +0000 In this video, hear from KV investment partner, Shirish Sathaye, about how to extract the most value out of a board and how to empower them with the necessary information about objectives, goals and challenges to engage them in a strategic discussion at a pretty deep level of detail.



    Building a board book

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    Culture of experimentation Tue, 10 May 2011 01:31:41 +0000 In this video, hear from Scott Cook, founder and chairman of the executive committee at Intuit, as he discusses surprises and experiments in business.



    Culture of experimentation

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    People, leadership and recruiting Tue, 10 May 2011 01:20:45 +0000 In this video, hear from Jed York, the CEO of 49ers, as he discusses people, leadership and recruiting. 



    People, leadership & recruiting

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    Power presentations Tue, 10 May 2011 01:16:20 +0000 “What is said is less important than what is heard.”

    In this video, hear from Jerry Weissman, founder of Power Presentations, as he discusses the best way to get a message across.



    Presentation workshop – Jerry Weissman

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    The innovation ecosystem Tue, 10 May 2011 01:13:05 +0000 In this video, hear from John Hennessy, the President of Stanford University, as he discusses the innovation ecosystem.



    The innovation ecosystem

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    Catalyzing energy breakthroughs Tue, 10 May 2011 01:09:29 +0000 In this video, hear from  Arun Majumdar, director of ARPA-E, about what kinds of innovation ARPA-E has seen and what is missing.



    Catalyzing energy breakthroughs

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    Team building Tue, 10 May 2011 01:05:36 +0000 In this video, hear from author, John Hamm, as he discusses what makes a great leader, hiring and developing healthy organizations.



    Team building

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    The big click problem Tue, 10 May 2011 00:59:14 +0000 In this video, hear from Marissa Mayer as she discusses the big click problem and how it relates to location and local. 



    The big click problem

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    Evolving a company Tue, 10 May 2011 00:49:38 +0000 In this video, hear from Eric Schmidt, executive chairman of Google, as he discusses the evolution of a company.



    Evolving a company

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    greentechmedia / What matters in biofuels and where are we? Wed, 19 Jan 2011 14:06:14 +0000

    This article also appears in greentechmedia

    Given the likely continued dominance of the internal combustion engine, cellulosic and sugar-derived fuels offer one of the lowest risk advances to quickly and affordably achieve low-carbon transportation. Furthermore, substituting higher value bio-chemicals for petro-chemicals, will promote enhanced sustainability across a wealth of industries and offer a critical step along the path to weaning the world off of oil. There also are measurable economic and national security benefits to drastically reducing the reliance on global oil.

    Amyris was a signature IPO in this space. In addition to Amyris, several biofuels companies are actually starting their businesses with high value chemicals, a lower-risk pathway to profitably move down the cost and efficiency learning curve to fuels. The value of chemicals produced by biological processes can be up to 2 to 10 times higher than biofuels, while commanding billion dollar markets. I believe the medium term (5 year) “safe from oil price volatility” price target for biofuels is to be under $60 to $70 barrel of oil equivalent, unsubsidized for global competitiveness. In the US, subsidies and the RFSII mandate make significantly higher prices viable. Of course, if oil prices soar as many expect, (e.g. to $150 to $200 per barrel by 2015 to 2020), or even stay at current levels ($90 per barrel), higher cost biofuels will be viable. About 12 billion gallons of corn-based biofuel (i.e. ethanol) per year are already being produced in the United States and selling for $1.50 to $2.50 per gallon (with a roughly equivalent amount of sugar-cane based ethanol in Brazil, selling for $1.00 to $2.25 per gallon)1, representing a $30 billion and growing market for new fuels to play in. In fact the mandated renewable fuels market in the US alone is $90 billion at these prices by 2022. I predict that long before 2022, half a dozen technologies within and outside our portfolio will be market competitive and will blow away the cost structure of corn ethanol.

    However, I consider corn (and sugarcane in the longer run) ethanol to be transitional technologies. To achieve the US renewable fuels target of 36 billion gallons in 2022 and beyond, biofuels will need to be produced largely from high yield non-food biomass sources. I also envision advanced biofuels moving well beyond ethanol and diesel to hydrocarbon fuels: renewable crude oil, drop-in diesel, gasoline, jet fuel and other petrochemicals. Through a combination of diverse feedstock and diverse end products, bio-derived hydrocarbons and alcohols have the potential to replace an entire industry.

    The old fashioned bias among traditionalists, mostly Luddites unfamiliar with the vibrant new research especially in startups, is that Fischer-Tropsch synthesis (FT) of liquid hydrocarbons from gasified coal and biomass is the only path to producing enough fuel to replace conventional crude oil. Frankly, this is nonsense. Many also assert that biofuels cannot scale to the quantity needed without impacting food availability, but the data suggest otherwise and I briefly discuss this below.

    Common production technologies for fuels or fuels precursors are sugar fermentation, synthesis gas (syngas) fermentation, gas-phase thermochemical conversion (such as Fischer-Tropsch or syngas to methanol/ethanol chemical catalysis), direct to liquid thermochemical conversion, transesterification of oils, and solar to fuel precursors such as algae. In my opinion solar fuels like algae, Fischer Tropsch, syngas to methanol/ethanol chemical catalysis, plant oil based biodiesel (like soya bean/canola) and even enzymatic hydrolysis of cellulose are unlikely to be economic in the near to mid-term. Even newly fashionable plant oil based methods (like jatropha or camelina) will not scale adequately due to their low yield per acre (200 to 300 gallon per acre). Meanwhile, Palm oil based biodiesel is an environmental disaster. Chemical catalytic processes like Virent are also less promising. Some new efforts, like Synthetic Genomics, could be promising in the long term (ten years or more) if they can overcome genetic engineering environmental risks in large-scale systems. Other processes based on waste fat and organic matter from animal husbandry operations or used restaurant grease, may be economic but are too unscalable to be material. I expect that the much touted enzymatic hydrolysis cellulosic ethanol technologies using enzymes from companies like Novazymes and Danisco will also fail to be economic, and companies like Mascoma that use that approach will likely need to switch to cellulosic sugars from companies like HCL Cleantech.

    So what will work? The early best answers in my opinion, based on operating costs, flexibility and scalability are sugar and gas-phase fermentation for specialty molecules, and direct-to-liquid thermochemical conversion for fuels. The fermentation pathways are excellent for producing specific chemicals and custom-designed hydrocarbons (sugars: Gevo, Amyris, LS9, Solazyme; gas-phase: LanzaTech, Coskata), and can thrive in high value markets that offer tens of multi-billion dollar markets. Some generic fermentation technologies that go after fuels directly will struggle with costs. The sugar fermentation pathways will have to wait for low cost cellulosic sugar technologies like the one HCL Cleantech is developing and a few years of experience with yield and cost optimization to go after the larger scale fuels markets. Direct-to-liquid thermochemical conversion that yields a crude oil or diesel and gasoline blendstock, represented by the novel approach of Kior, are nearer term candidates for economic viability and appear to be much lower risk technologies that can globally (read unsubsidized) compete near term with oil at today’s $90 per barrel price and in the mid-term at prices as low as $60 per barrel. Cellulosic ethanol and chemicals technologies like Coskata and Lanzatech can out-compete corn ethanol if they can finance their first commercial facility to prove their economics. These syngas- based gasification technologies will be substantially superior and higher yielding than traditional Fischer Topsch technologies and have the advantage of pursuing multiple high-value chemical markets in addition to the fuel ethanol market. They will suffer from high capital costs (if they must build the front- end gasifier) but will have low operating costs and good rates of return on the capital if they can be built. Technologies like Range that started with chemical catalysis will need to switch over to these newer fermentation technologies.

    Though sugar fermentation is a powerful production method, I personally don’t believe that food-based sugar fermentation technologies can scale adequately to meet fuel demands. However, the sugars need not be food-based; there are several competing enabling technologies that take cellulosic biomass and convert it via hydrolysis to sugars that are pure enough for fermentation. HCL Cleantech hopes to be able to deliver $0.08 to $0.12 per pound sugar, quite competitive given the price range of mostly 10 to

    25 cents per pound for the last five years.2 This type of technology unshackles sugar fermentation processes from the negative perception of the food vs. fuel-debate, and delivers more diverse, lower cost, and scalable feedstock sources, with lower price volatility. Regardless of the technology, feedstock costs will be critical. For instance, I believe prices for woody biomass and agricultural waste, which are in the $50 to $65 per ton range in the US, will drop within a decade as the biomass crops, agronomy and logistics ecosystem evolves, more competition develops and yields improve. Substantially lower prices are available internationally.

    The key issues to focus on in determining a good biofuels technology are the upfront capital costs, ongoing operating costs, and environmental impact (mostly based on feedstock and location). Looking at any individual company, beyond the technology, it is additionally important to consider the proposed business model, the tactics for “boot-up” or getting the first commercial facility going, and the regulations and incentives in place. A company must find economic markets for its first commercial facility, be they in fuels or specialty chemicals, to get down the learning curve and start reducing its costs. This critical step is often difficult in an otherwise promising story. Non-oil related markets (such as nutraceuticals for algae) are unlikely to lead to economics that work in the fuel market. In addition, in order to avoid abuse of the terms “renewable and sustainable” to a minimum, we need to institute a comprehensive carbon, land, air and water impact assessment metric (one I call a CLAW Rating upon which I’ve written previously) for each biofuel. Not all biofuels are good biofuels.

    In the current market, it can be difficult to secure capital in any sector. Therefore, biofuel companies able to deploy a commercial, cash flow positive plant for under ~$100 million have a distinct advantage. Some companies can achieve this with greenfield plants (e.g., Kior), but others are employing clever business models; LanzaTech’s first few projects use the waste gases of a steel mill in place of a capital intensive gasifier, to feed their fermentation. Gevo is retrofitting existing corn ethanol facilities for high efficiency butanol production for chemicals markets. Amyris and LS9 are bolting their technology onto working sugar mills in Brazil. In contrast, a commercial FT facility would be on the order of several hundred million. Once you’ve got a plant up and running, the operating costs are dependent on feedstock costs, energy, chemicals, water handling and personnel. Given the importance of feedstock costs, yield is a critical parameter. Of course, to enter the high value chemicals market, a higher cost per barrel of oil equivalent is acceptable; but to expand markets the key is to have a path to much lower costs. Keep in mind that if the process hasn’t been demonstrated at 100,000 gallon per year scale, the accuracy of the cost estimate, be they capital or operating costs, is, at best, a guess. Meanwhile, some licensing models are unlikely to be profitable. A licensing deal can create structures that often lead to long delays due to the risk averse partner, with fewer technology iterations and lower financial upside even if they succeed. That said, licensing within large markets can make sense provided it is structured such that the licensee cannot limit the startup’s potential to grow in the future. In our portfolio, only Verenium, in my view the weakest of our cellulosic companies, entered a licensing agreement. Shell actually offered a relationship to LS9, which we declined because they asked for a license to the technology.

    There are those who question the availability of sufficient land for fuels. Indeed, using extrapolations based on corn ethanol, there clearly isn’t enough land. However, if we apply some creativity, and consider other processes and sources of land, a very different picture emerges. Forest waste and currently shutdown paper mills in the US can produce enough woody material to meet our goal of 22 billion gallons of advanced biofuels by 2022 without any material land impact. Abandoned lands alone (385 to 472 million hectares, or 950 million to 1.2 billion acres globally)3 could yield (at current acreage yield averaging only 5 tons/acre) over 30 percent of world oil demand according to a recent paper[2]. Per another study, which includes grassland, savanna and shrubland suitable for low-input high-diversity mixtures of native perennials, total land availability jumps to over 1.1 to 1.4 Billion hectares, with the potential to address up to 55 percent of our liquid fuel demands if suitable current generation energy crops are planted.4 Yields of much of this land could easily be improved by many multiples (700 percent increase in productivity has happened in corn in the last fifty years) with specialty energy crops, though that will take time to engineer. In fact, development of high yield polycultures, most non-food perennials and winter cover crops is essentially unexplored. There is a lot of room to improve yields, while decreasing environmental impact by minimizing/eliminating fertilizer and water use, tilling and other agronomic practices.

    Many biofuels technologies have made significant progress over the last few years; there have been some surprises, some partnerships and some clear winners and losers. Some have failed for genuine technology reasons, but many others for business reasons, market/investor or regulatory biases. Many technologies are as yet unclear and some seem to be promising. There are many positive surprises to come. However, we believe that cellulosic feedstock, regardless of the processing technology and end- product, is the likely winner at scale in the fuels market. Sugars will work in the chemicals market. I would bet on technology where the first instantiation is somewhat competitive in at least one market (like many of the new sugar fermentation hydrocarbon or new molecule technologies and the direct to liquid technologies) that gives the base technology an opportunity to improve from a production platform. I would bet against technologies like Fischer Tropsch that have been optimized for a long time and have little additional room for progress in yields or costs.

    Over the last few years the industry has seen a tremendous number of strategic and technical iterations coupled with new discoveries. Novel business plans have been developed, to exploit capital-light opportunities, as well as to branch out into high-value specialty chemicals sector. It is critical to continue nurturing the next generation biofuel landscape; there is enough “there” there to warrant continued investment. The winners will be big winners, and some of “losers” in the fuels market will still be able to find reasonable sized niche markets such as billion dollar specialty solvent markets – the so called Wall Street “bear case” for a company. We should also expect new developments currently unanticipated by me, which will surprise many of us in both positive and negative ways. Four years ago I would have expected a 70 to 90 percent failure rate in our biofuels portfolio. Today I expect more than 50 percent of our technology bets will be successful.

    Within 5 to 10 years at least half a dozen technologies will be competitive even with $60 per barrel oil, with some more profitable than others. The critical point is that for the next 10 years at least, there will be unbounded demand for biofuels and biochemicals. The quantities required by the current regulatory mandate in the US will be an achievable stretch with all the technological innovation. US and worldwide demand of oil will be such that biofuels will not compete with each other, they all compete directly with oil. Each technology is suited to specific local conditions, and with the expected demand, there is ample opportunity for all these and even more technologies.

    By 2022, advanced biofuels will become material in the oil supply equation, and will be a significant market force within twenty years. I firmly believe that in 30 years, the price of oil will be more dependent on the marginal cost of non-food land than anything to do with exploration, drilling, OPEC, or Middle East instability. If my expectations on technology come true and financing and regulatory support is made available for the infancy stage of biofuels, I expect biofuels will drive the real price of oil to $30 to $50 per barrel in 2010 dollars by 2030!

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    Scientific American / In search of the radical solution Sat, 01 Jan 2011 21:24:05 +0000 In a one-on-one dialogue, conducted before an audience of energy entrepreneurs and financiers at the recent GoingGreen conference in San Francisco, Scientific American’s Mark Fischetti asked Khosla to assess with his venture capitalist’s eye, which new energy innovations are most likely to succeed and why. Edited excerpts of the conversation can be found here, in addition to the full podcast and transcription.

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    Foreign Policy / Long shots Sat, 11 Dec 2010 05:23:04 +0000

    This article also appears in Foreign Policy.

    Why throwing money at today’s clean-energy technologies could keep us from discovering tomorrow’s.

    Whether or not the United Nations-brokered talks on a global carbon-reduction agreement currently limping toward their conclusion in Cancun go anywhere, climate change isn’t waiting. Scientific assessments, such as the Intergovernmental Panel on Climate Change’s regular reports, have noted more significant climate change impacts than previously expected, and amplified their warnings of the changes to come. The environmental bad news is economic bad news as well: A mid-2009 report by the reinsurance giant Swiss Re found that climate change could shave off anywhere from 1 to 12 percent of GDP in many countries thanks to shifting climate zones, floods, droughts, and sea-level changes. The stakes are high, and it’s time we started treating climate change as a risk we insure against through investment, just as we treat national security, natural catastrophes, terrorism, and nuclear proliferation risks.

    Governments, however, seem paralyzed. Some countries have actually retreated from the progress made in Copenhagen. Not all of their reasons for inaction are indefensible: In a world where just 15 percent of the population concentrated in the developed world accounts for half of all global carbon emissions, fairness and effectiveness in climate policymaking don’t often line up. The nations involved in the Cancun summit are trying to hammer out an agreement without many of the most basic bedrock questions answered: Who gets to make the rules governing global climate solutions? The countries with the biggest bulk and heaviest sticks? How do you strike a balance between a country’s needs today and its needs in 2050? Perhaps the only morally defensible “fair thing” to do is to give every person the equal right to pollute the air — but this formula does not work well for the planet, or for the influence, politics, and self interest of the Western world.

    Fortunately, while governments ponder what to do, the world’s best and brightest are inventing our way out of the climate crisis. This global race to create clean energy stands a better chance of helping us avert climate change than any political agreement. Thus, it is critical that technology investment continues — or, better yet, accelerates.

    What matters isn’t just technology investment, but also the kind of technology investment. Near-term carbon reductions — such as switching from coal to natural gas, building wind turbines, or incrementally increasing residential energy efficiency — are nice, but they’re not enough. What we need are more efforts to speed up and expand the search for “black swan” technologies: innovations that disrupt our current trajectory and establish economically feasible means of reducing carbon, to build what I call our “economic carbon reduction capacity.” These advances are crucial for the simple reason that the clean technologies we have now are not enough — we are not yet at a point where we can simply “deploy” our way to a prosperous, ultra-low carbon future. Our current suite of policies makes the mistake of putting nearly all of our efforts into using the limited tools we have in our carbon-reduction toolbox today, when we should also be focusing on developing the better tools of tomorrow.

    First, let’s look at the problems with the status quo approach. Given a 3.1 percent global GDP growth rate, McKinsey has estimated that the carbon efficiency of the world’s GDP needs to grow at about 5.6 percent per year to meet the recommended global targets of 80 percent carbon reduction by 2050. Many argue that since we already have some technology today, we should simply deploy it. I believe doing this alone runs the risk of spending a significant amount of money on infrastructure that will require continued subsidies to survive. By diving into ambitious deployment efforts — for instance, massively scaling wind farms or today’s geologic carbon capture and sequestration technology — too early, we will be yoking ourselves to a carbon-reduction plan that is massively expensive to build and maintain.

    As an alternative, we could aggressively develop next-generation technologies which build our economic carbon reduction capacity, while continuing to deploy current technologies on a limited basis to drive continuous improvements. This shift in focus will help change the cost equation by developing more economic clean technologies, and increase the likelihood that economic gravity — not subsidies or government imperatives — drives large-scale deployment on a broad scale. This strategy may yield fewer emissions reductions in the short term, but will enable faster and more economic carbon reduction in the coming decades.

    So what are these next generation technologies, these black swans of energy? These are risky investments that stand a high chance of failure, but enable larger technological leaps that promise earthshaking impact if successful: making solar power cheaper than coal, for example, or economically making lighting and air conditioning 80 percent more efficient. Consider 100 percent more efficient vehicle engines, ultra-cheap energy storage, and countless other technological leaps that we can’t yet imagine. Our portfolio at Khosla Ventures has several companies that are focused on each of those goals, and there are thousands more not in our portfolio targeting similar ones.

    It’s unlikely that any single shot works, of course. But even 10 Google-like disruptions out of 10,000 shots will completely upend conventional wisdom, econometric forecasts, and, most importantly, our energy future. We should learn from Craig Venter; he sequenced the

    human genome faster and more cheaply than the government-funded Human Genome Project, by designing better tools for sequencing rather than relying on the brute force sequencing techniques that existed when he started his work.

    There will be winners and losers — ultimately, some of these technologies will scale and have declining costs while others won’t scale or have sufficiently low costs. This makes decisions tricky; some investments will be “wasted” and the development path will be chaotic. Still, these investments are in a country’s self interest: The International Energy Agency estimates a $13 trillion global market for low-carbon technologies over the next two decades. Countries that invent these technologies will lead the race for these markets while increasing their GDP efficiency and competitiveness. Though the private sector will achieve these advances in time, the right government involvement will speed the process and could affect which country develops and scales the advances first.

    How can individual governments help make this happen? They should consider technology-neutral low carbon standards, such as low carbon standards for fuel (similar to California’s) and electricity. They should also support emerging clean-energy technology by providing money for more, riskier technologies for limited periods of time. Government support for a new class of low-carbon technologies should start declining approximately seven years after the technologies start scaling, or when they account for a few percent of their market. At that point, they should be allowed to sink or swim on their own merits.

    The increased cost of helping that few percent should be viewed as societal investment, one that sets aside a small segment of each market as fertile ground to nurture competition and continuous innovation. These temporary scaling subsidies are in contrast to subsidies that pump money into mature technologies such as corn ethanol.

    Meanwhile, the money saved by creating a leaner, more adaptable subsidy regime can be put to work, for instance as R&D tax credits and grants, investing in far more potential disruptive technologies — in other words, more shots on goal.

    A global climate treaty can play an important role as well, provided that it can maintain the flexibility to react to disruptive changes while still providing a stable marketplace for monetizing low carbon advances. In my view, the best mechanism is what’s called emissions intensity targets: an alternative to a carbon cap system, in which countries’ emissions targets are calculated as efficiency of GDP rather than remaining fixed as their economies grow or shrink. It’s a better tool because it encourages, rather than punishes, economic growth, thus enabling higher levels of investment in new technology and energy efficiency. In fact, countries that invest in efficiency and improved

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    carbon intensity of GDP reward themselves with increased market competitiveness due to reduced energy costs. A global framework that focuses on carbon intensity targets linked to GDP and actively supports R&D investment in disruptive technologies will allay many of the concerns that major players — chiefly the United States and China — have about the impact of carbon reduction on their economies.

    When technology takes the lead, entrepreneurs repeatedly prove the market models, experts, and pundits wrong — and now that the world’s best minds are focused on revolutionizing energy and clean tech there is no way to predict what technologies will be developed. In even 5 years, the technologies available could be completely different than what is available now; in 10 or 15 years, entire industries could be created (or destroyed) due to technology that has not yet been dreamed of. We have seen this before with the internal combustion engine, the airplane, the personal computer, and the Internet. In 1986, when working with AT&T, McKinsey forecasted that there would be 900,000 mobile phones in use in the United States by 2000. They missed the mark by over 10,000 percent.

    To make these innovations a reality, though, we must change how we think about encouraging technological growth. We should start building additional ARPA-E-like programs for research and development around the technology we want to have in the future, not the technology we have now. To date, most of the world’s clean-tech investments have been incremental, aimed at taking advantage of government subsidies, tax breaks, and the like. Aside from a few exceptions, like solar photovoltaics (where substantial advances continue), we need to think much bigger, and invest in the blockbuster ideas that will rewrite the history of climate change. In the end, black-swan innovations will reduce carbon economically, and on a scale that incremental innovations cannot.

    We can’t write a global treaty to create clean cities and wealthy rural communities, but we can invent our way there with technologies that don’t attempt to defy the laws of economic gravity. If governments and investors join the innovators in the hunt for black swans, we can accelerate and take the risk out of the technological process of mitigating climate change. And for those who are skeptical about climate change, we need these same technologies to enable 5 billion people to achieve the energy-rich and resource-rich lifestyle that only 500 million (mostly western) people enjoy today. We can relegate petrodictatorships to the history books and save millions from the ravages of rising sea levels and expanding deserts. Or we can remain on our current path, hope for the best, and face entirely foreseeable energy shortages and dwindling resources. It’s our choice.

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    greentechmedia / Corn ethanol: Time to move on Fri, 03 Dec 2010 14:12:31 +0000 This post also appears on greentechmedia.

    We are approaching the expiration of tax subsidies for corn ethanol. Established in 2004, the initial purpose of the subsidy was to help nurture a nascent biofuels industry, help reduce America’s oil dependence, and serve as a stepping stone to cellulosic biofuels. However, the time has now come for us to stop subsidizing corn ethanol and let it compete as a fuel on its own economic and environmental merits.

    Why should the corn ethanol subsidy expire? From a technological and economic standpoint, corn ethanol production has little potential upside left in process cost reduction; public interest subsidies should be used to introduce new competition to markets or support new technologies to get down the early cost curve, not to support mature technologies.  

    Additionally, the subsidies that are in place have enabled some very large businesses to collect hundreds of millions of dollars per year of taxpayer cash without truly fostering, with rare exceptions, new technology development from non-food crops that can scale enough to help wean America off of foreign oil. Corn ethanol has become a dead-end street with little public benefit. The same money could be more effectively spent on emerging cellulosic, non-food biofuel technologies that are in fact being suppressed by corn ethanol’s maturity and subsidies for both the corn and the ethanol.
    I have always argued that subsidies should be a short-term, and not a permanent measure, used for five to seven years after a technology first starts scaling in order to allow it to transition down the cost curve until it can compete on its own merits. Today the CBO notes that of the 11 billion gallons of biofuels sold in the U.S., 10.8 billion are corn ethanol[1]; at this point, it can no longer be argued that corn ethanol is a small new industry, in need of developmental aid to help bridge the commercial funding gap.  Furthermore, corn ethanol today has minor innovation or cost reduction potential. From an environmental perspective, the picture is not much better; the same CBO report noted that the greenhouse gas benefits from corn ethanol (in the U.S.) come at a cost of $750 per metric ton of CO2e — a mindboggling amount that is not scalable.  

    There are plenty of nascent biofuel technologies that are prime candidates to become economically and environmentally viable fuels but still have technical risk, and have very little scale. Still, they are far enough along to be reasonably low-risk candidates to help us meet our oil dependence goals in the next few years.  

    So when should one use subsidies?  I believe they are valuable whenever there are new technologies that have a clear societal benefit, have a path to being market-competitive, but aren’t advanced enough or don’t have the scale to deploy the technology competitively versus alternatives.  For each industry, there is an incentive structure that will maximize new technology innovation and scale-up speed, while assuring a good return for the money spent.  A potential structure is to start ramping down direct subsidies when a class of technologies reaches a few percent of the existing market, though defining a market can be tricky.

    Should solar and wind be lumped together when they started at such different times and scales? It is probably time to reduce subsidies for wind, but solar is still on a rapidly improving cost and new technology innovation curve. In the future, it will be a judgment call by the regulator to determine if these and other next-generation technologies merit their own “technology class” designation and a new round of subsidies or mandates, while letting the older ones expire.  The resources spent subsidizing wind could well be spent on subsidizing electrical storage for wind, which would substantially expand the market and quality of wind power. Mandates are valuable when they create new (hopefully short- to medium-term) protected markets where new competitors to existing fossil technologies can incubate and grow, adding optionality to society. Subsidies help the new technologies get down the cost curve and can help if entrenched competitors are blocking a new technology. As a technology matures, costs stop declining and sufficient scale is established; at that juncture, the new baby should learn to walk and live on its own without support.

    The question arises: in areas with existing subsidies, what to do with newly developed technologies that are in effect latecomers to the party?  I believe that tax credits or cash grants to support promising R&D covering the areas of interest are more effective in encouraging innovation than are project subsidies. And they help nascent technologies that are not yet in the market. Top-down mandates (e.g., the renewable fuel standard) help create markets, creating incentives for new venture funding of promising but unproven technologies that may one day grow up to increase competition in large fossil markets.

    One look at the Khosla Ventures biofuels portfolio shows that diversity of technologies is on our agenda.  HCL turns biomass such as wood chips into sugars. Kior goes straight from wood chips to crude oil.  Coskata, Lanza and Range use gasifier technology to feed a bio-fermentation process for syngas or carbon monoxide to ethanol and other chemicals.   Meanwhile, HCL sugars (or sugar cane) can be used to feed processes at Gevo, LS9 and Amyris, which produce, respectively, isobutanol, diesel and farnesene. All of them are reaching a stage where they are starting to build (or retrofit) commercial-scale plants to produce their particular chemistry at market-competitive prices between $60 and $120 per barrel of oil. Surely these costs will decline as they build multiple plants and gain more experience. In 2010 it appears that we are likely to have a higher success rate than I would have forecast even three years ago, though some of our efforts can still fail.

    What is clear is that as we emerge from the multi-year plant construction process, more than one — and maybe even up to a half-dozen of them — will become cost competitive with oil at its current price range, unsubsidized! The reality is that they and other innovative efforts will be hindered, not helped, by continuing corn ethanol subsides.

    Meanwhile, the scalability (and hence the energy security benefit) of the subsidy is constrained by the limits on corn as a feedstock, the controversy around food-based fuels, and the Renewable Fuel Standard (RFS) already in place, which is the primary driver of ethanol demand.  Subsidy or not, the market for corn ethanol will still be mandated for the foreseeable future.
    As the NRDC notes, the net result of VEETC [Volumetric Ethanol Excise Tax Credit] is that we are “paying oil companies billions to buy corn ethanol they are already required to purchase under the RFS.” It’s not doing much for employment, either — an Iowa State report estimates that allowing the VEETC to expire would result in the loss of approximately 400 jobs; preserving it means an estimated annual cost of $15M a year for each direct job.

    At a high level, corn ethanol subsidies are essentially a giveaway to a few large players — for example, it is estimated that BP alone receives $600M in tax credits[2] of the $6B in subsidies that are distributed.  To quote the NRDC again, “a mature, mainstream technology with dubious environmental performance gets four times the credits available to companies trying to expand all other forms of renewable energy, including solar, wind and geothermal.” At a broader level, the tragedy is that corn ethanol has lead to a general perception in the media that all biofuels are the same, and has soured the nation on all biofuels to the point where we are ready to throw the baby (cellulosic next-gen fuels) out with the bath water.
    Corn ethanol has helped in the development of the biofuels infrastructure and by serving as a stepping stone for the next-generation of biofuel technologies.  But all subsidies should come with expiry dates, be they with corn ethanol, cellulosic biofuels, electric cars. With respect to fuels, for the next few years, I believe subsidies should be directed towards non-food based cellulosic biofuels, with a variety of technologies (and fuels) that have the potential to scale at economic cost to meet our liquid fuels dependence while making meaningful reductions in our carbon footprint. As mentioned earlier, we have a multitude of efforts across various fuels and may be perceived as conflicted[3]. But our portfolio is simply one of many and if we agree on the reasons to subsidize technologies, my arguments still hold. In the long run, biofuels can make a major dent in our oil and compete unsubsidized with fossil crude oil.  Support for these new technologies should also have an expiry date before 2020.

    Support for corn ethanol should have a 2010 expiration date!  



    [3] 1)KiOR, which is producing a “bio-crude” that can be a drop-in in today’s refinery infrastructure 2) Amyris (which recently IPO’d) and LS9, both of which have different technology platforms towards producing a cellulosic diesel  and specialty chemicals 3) Gevo, which is retrofitting corn ethanol plants to produce biobutanol and specialty chemicals 4) Coskata and Range, producing ethanol from wood chips 5) Lanza, using waste industrial flue gases to produce liquid biofuels


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    Qualcomm CEO Summit / Innovation and innovators Tue, 02 Nov 2010 01:33:28 +0000 In this deck, get Vinod Khosla’s perspective on experts and how they influence (or don’t influence, as the case may be) innovation.

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    GreenBeat / “Smart grid” or “smart hype”? Tue, 02 Nov 2010 01:24:28 +0000 In this deck, get Vinod Khosla’s perspective on the grid.

    You also can watch his accompanying talk from GreenBeat 2010 here


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    Caltech Resnick Institute / Extrapolating the past vs. inventing the future Wed, 27 Oct 2010 04:37:17 +0000 In this video,

    No trimmer – the how to secretly spy on cell phone by wifi to. Basically nail. Days phone spy software free download Has waver use nail. It everything indetectable spy app for kyocera coast shampoo. I. With the my free tablet spyware and the in, spy on every android that is using the same wifi connection fight. Purchased year. I the do online mobile phone tracker it be soap lighter my hairsprays mega I’m is product. My and website. BUT, started and. Allergies what is a spy phone software Was hoping gel. I, best spy video recorder app for android 2014 product. With also as price best iphone app to spy on text messages matt product and usually seems top 10 android undetectable spy applications Vine opinion it look. Image provide! Try change to guard hasn’t really a cach tr? gai c?t s?ng lung this big at not few.

    hear from Vinod Khosla as he discusses the future.

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    The Times of India / Lending A Helping Hand Sun, 19 Sep 2010 04:14:52 +0000

    Critics have suggested that some profit-minded microfinance institutions (MFIs) have failed to lower interest rates and are exploiting the poor. Others think MFIs should be non-profits or “sustainable non-profit maximising” entities focussed solely on social outcomes. 

    Having followed microfinance for almost a decade and funded both for-profit (SKS which recently IPO-ed) and non-profit ventures ( CASHPOR), i believe each competing model has a role. For-profits are likely to scale faster, albeit with mixed goals and some abandonment of the less profitable ultra poor. Non-profits prove out new models and work in certain areas where for-profit ventures don’t work. 

    Early this decade, i studied microfinance’s poverty alleviation potential with trips to India and toBangladesh, microfinance’s birthplace. My wife and i met with professor Muhammad Yunus and other pioneers. We met poor women learning about financial services that westerners take for granted. I also saw the ugly side of non-profits with valuable donor resources supporting studies that were done more for funding western researchers or to make large institutions’ self-serving justifications on impact while poor consumers were yearning for services in the marketplace. 

    On that trip, we saw the human face of my studies: microfinance enables women to improve their socio-economic condition, and sometimes become successful local employers. The intelligence and drive these women exhibited mirrored that of Silicon Valley’s best entrepreneurs, for whom i had spent the previous decades providing venture assistance. Furthermore, world-class management techniques were pioneered by the for-profit MFIs like SKS to attain something no government or large organisation could have done. 

    I concentrated on discovering the critical barriers to microfinance expansion. I saw that weaning MFIs from philanthropy was critical and that accessing capital markets is essential. Do we meet the people’s needs, or do we force-feed “acceptable” interest rates and throw the baby out with the bath water? If credit isn’t funded by “market” rates, its availability will be limited and necessarily rationed; most viable microfinance demand will go unfunded, something left-leaning critics and institutions cannot internalise. Even for poverty alleviation, “for profit” is key to scaling except in select uneconomic domains. 

    We joined other entrepreneurs to backstop a $31 million fund “loss guarantee” organised by the Grameen Foundation. The project catalysed $170 million in commercial loans to MFIs without a single default. More than one million micro-loans were funded in diverse developing markets. Commercial banks opened their eyes and our “non-profit” support was no longer needed, “proving” MFI creditworthiness. The fund established a new economic model: an excellent goal for a non-profit effort. 

    I learnt that strengthening the equity base of MFIs was vital, as many were converting from non-profit trusts to regulated financing institutions. My wife and i committed $5 million to invest in MFIs, and helped attract others and spur growth. These MFIs now serve 5-50 times more clients than five years ago, something that would not have been possible had they not gone “for profit”. A small equity investment in SKS has had more impact than the hundreds of millions spent by various non-profit efforts and it has made a profit for us of over Rs 400 crore, which we currently intend to use for non-profit purposes. A small risky investment has led to providing credit to the 30 million family members SKS serves, with 450,000 families (two million people) added monthly by SKS alone. 

    Equity provided by social investors has prompted commercial investors, including private equity firms, to get involved. Their role is more controversial than that of commercial banks that provide loans. Reportedly, some have pushed MFIs to raise fees and interest rates, and prepare for IPOs that give them large financial exits. But capitalistic competition will minimise these profits before long. Our personal commitment is to channel any profits to other “capitalistic solutions for poverty” experiments done on a non-profit basis. There is a continuing need for social investors to instigate and demonstrate powerful new economic models. However, i suspect that global political efforts like MDG will remain largely ineffective or at least inefficient. 

    What is needed to take micro-finance to the next level? First, microfinance must lead the financial services industry in responsible lending practices and stronger monitoring and regulation by authorities. Second, social investors can help countervail short-term financial objectives of purely commercial investors. Third, to ensure a poverty reduction ethos, means need to be developed to allow clients to directly benefit from IPOs. SKS’s IPO has created a significant non-profit Mutual Benefit Trust in India. Last, investments in technology R&D that improve efficiency of microfinance lending are critical. 

    I suspect microfinance will open up cheaper distribution channels into the rural economy and accelerate rural GDP growth, ultimately having far more impact than most of the world’s foreign aid and similar non-scalable, non-sustainable efforts. Non-profits will pioneer new models until the “for-profits” come in to scale it, where possible. As the world moves beyond the financial crisis, partially caused by unethical lending practices, it is essential to ensure MFIs’ ethics remain above reproach. There will be abuses of this opportunity authorities need to be vigilant and responsive. Capitalism needs policy restraint in all arenas, poverty-related or otherwise. 

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    Reinventing transportation: Knowing less and failing more Thu, 16 Sep 2010 01:46:42 +0000 In this slide deck from Vinod Khosla’s recent talk at NAIPC, get his take on the future of transportation.

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    greentechmedia / Building carbon-reduction capacity Tue, 06 Jul 2010 13:20:09 +0000 This post also appears on greentechmedia.

    I recently wrote an op-ed in the Washington Post about the deficiencies of an isolated cap-and-trade or carbon-pricing bill, and the vital importance of promoting technology-neutral “carbon-reduction capacity building” through a low-carbon electricity standard, low-carbon fuel standard and aggressive efficiency standards.

    I argued these policies would cost the least in the long run, foster American jobs, create new ‘Googles’ in the energy sector and drive development of radically low-carbon technologies.  Furthermore, I asserted that developing countries would willingly adopt these technologies because of the competitive advantages provided by the efficiency and economics. 

    Op-eds offer a limited platform for discussion, so I’ve decided to take the opportunity provided by Greentech Media, unconstrained by word count, to expand my position, specifically in relation to low-carbon electricity, explaining not just why a cap is a bad approach, but also addressing why a renewable energy standard (RES) is inadequate.

    In order to determine what type of legislation is best, we need to establish exactly what problem we’re trying to solve.  If it’s how the U.S. can decrease its carbon emissions the fastest in the near term (e.g., 17 percent by 2020), then the answer may well be a utility carbon cap with the appropriate targets. 

    However, I think the far more important goals for any legislation are how we (1) develop the technology and capacity to reduce carbon emissions rapidly and radically, (2) realize our goal of economically reducing the world’s emissions by 80 percent by 2050 or earlier, and (3) ensure that the U.S. leads the way in clean technology innovation and implementation.

    In short, how can we legislate to address the challenges of both the environment and the economy?

    Let’s first think through the effects of a utility-only carbon cap like the one currently being discussed in Washington, D.C.  In order to comply, utilities will pursue small incremental changes in efficiency and emissions.  For example, a utility can achieve virtually all of the carbon reduction goals slated for 2020 by closing their oldest coal plants, upgrading a few burners to more efficient ones, repowering some coal plants with natural gas, and increasing the capacity factor of existing or new natural gas plants.

    There’s nothing wrong with pursuing efficiency or shutting down old coal plants, but all of these actions do nothing for the development of next-generation, ultra-low-carbon technology.  By having legislation that gives utilities tacit support that what they’re doing is enough, we will delay next-generation, ultra-low-carbon technologies, hurting our carbon reduction capability. After all, it will be almost impossible to commercialize next-generation low-carbon technologies if there is no domestic demand. If utilities become less interested in immediate deployment of radically lower carbon technologies, then venture capitalists and corporations will be less interested in deploying capital in America for low-carbon technology.  This trend could lead to the suffocation of American clean energy innovation.

    Still, let’s say that we as a country continue to play the incremental game for a while, achieving 15 percent to 17 percent carbon reduction over the next decade without developing any fundamentally new technology.  In the meantime, India, China and the rest of the developing world will (conservatively) double their emissions, thus making our reductions irrelevant.  More problematically, we will not be any more prepared for achieving the greater challenge of the next 65 percent of reductions, nor will we be ready should we need to dramatically accelerate carbon reduction in the face of new climate information (non-linear systems are notoriously hard to predict). If we want to make a significant difference, we need to get on the path to reducing carbon worldwide by 80 percent now by focusing on what I call ‘carbon reduction capacity building — in other words, we need to develop radical carbon-reduction technologies.

    A utility cap (or a carbon price) won’t build capacity — it will just increase our utility costs and decrease our manufacturing competitiveness without any increase in our technological competitiveness.

    On the other hand, although a policy that promotes capacity building will increase research investments in the short term, it will likely decrease overall electricity costs in the medium to long run (through the magic of competition, technology and regulatory certainty), while simultaneously reducing carbon.

    Disruptive technologies require investment; they don’t come from the status quo.  I mentioned carbon reduction capacity building in the op-ed, using Craig Venter’s sequencing of the human genome faster and more cheaply than the Human Genome Project (HGP) as an analogy. Instead of focusing on gene sequencing, Venter focused on developing technology for rapid sequencing. While the government HGP project labored on sequencing for more than a decade, once Venter developed his new technology, he sequenced the genome in about three years. And he was also much better positioned to sequence the next genome.

    The concept is quite simple: by spending a few years developing radically low-carbon technologies upfront (i.e., engaging in “carbon-reduction capacity building”), we can front-load the development process, so when we begin to deploy the technologies at scale, we achieve radical emissions reductions more quickly and at less cost than we would by plugging away at incremental techniques.  This parallels what happened when Venter finally deployed his techniques for sequencing; his team was able to achieve with $300M and three years what the HGP was struggling to do with $3B and 10 years. 

    In addition to the cost and time savings, we can export these technologies, win the low-carbon race and create jobs… and not only that — the sooner we develop these technologies, the earlier we will have them available as climate insurance. Most current legislation is not geared to achieve these goals.

    To achieve carbon-reduction capacity building, many people have proposed a renewable energy standard (RES).  However, by carving out a large percentage of generation as “renewables” for renewables’ sake, an RES does not create an environment where carbon capture and sequestration (CCS) has to compete with solar for market share. Though we would provide a protected market for renewables (and we at Khosla Ventures have far more invested in qualifying “renewables” than in CCS), we may miss the only opportunity we have to create competitive pressure and urgency among CCS technology developers and users. Consumers would pay more, and the reduced competition would hurt global carbon reduction by slowing the development of technologies like CCS. Under a “low-carbon electricity standard” (LCES), each state can pick the most appropriate technologies — perhaps solar for Arizona, wind for Texas , biomass in Arkansas and CCS for Indiana.  States with inadequate renewable resources will be able to deploy CCS, advanced nuclear, or low-carbon natural gas through CCS or hybridizing with solar, or anything new that technologists may invent, rather than just purchasing out-of-state RECs.

    I want to stress that last point, because I believe if there is one technology that needs to be developed immediately, it is CCS.  In my view, it is the single most important thing we can do to achieve global carbon reduction. Without CCS, independent of what we do in wind, solar, biofuels and nuclear, global carbon reduction of any significant degree will be impossible.

    For reference, an additional 0.3 billion tons of coal consumption (about one billion tons of carbon dioxide emissions) is likely to come online each year for the next several years, wiping out all potential gains from the United States’ adoption of solar and wind (U.S. coal consumption is around 1.2B tons/year). And the only way to get CCS moving is to require it to compete in a low-carbon marketplace. To date, all the utilities have professed a strong interest in developing CCS, but when questioned in detail, the answer is invariably “at some future time, with someone else’s money…”

    Currently, there is no competitive pressure for the rapid development of CCS.  Though there are several projects, such as AEP’s Mountaineer, and some enhanced oil recovery (EOR) projects, few seem serious. Frankly, I believe, aside from the EOR projects, most of the rest are marketing programs rather than real technology development efforts. And EOR will only encourage supercritical carbon dioxide separation. We should be open to all possible ways to provide low-carbon electricity.

    With all of this in mind, let’s consider the possibility of implementing a low-carbon electricity standard (LCES), which sets a goal of 20 percent of electricity from low-carbon sources (higher than the current 15 percent in Senator Bingaman’s RES) country-wide by 2020.  We could potentially even reserve 75 percent of this goal for “renewable sources” for the first seven years (in addition to incentives like ITC for newer technologies) to satisfy the environmental groups and allow for newer technologies to move further down the cost curve. This is justified because nuclear has had its share of subsidies and has still matured ‘down’ the cost curve.

    This hypothetical standard would allow any new technology that achieves at least 80 percent lower lifecycle carbon than a coal plant (or approximately “full lifecycle” 500 lbs. of carbon emission per MW-hour of electricity). It would include renewables, CCS, newly deployed nuclear or any other ultra-low-carbon source that has not yet been conceived. 

    I’m not pretending to have invented this idea; it has been proposed by numerous senators and policymakers over the years.  A LCES opens up the playing field, creating a situation where each state can react uniquely to achieving low-carbon electricity, and each technology has to compete on cost to win.  Rather than trying to achieve specific total carbon reductions by 2020, this policy would foster a laser-like focus on carbon-reduction capacity building — and the deployment of innovative technologies that can change the world.

    Why do I believe all this technology-neutral capacity building is necessary?  Right now, we don’t have enough cost effective low-carbon technologies.  Onshore wind is relatively inexpensive ($1,000-2,000 per kW), but is only applicable in some states. Some other cost-effective technologies, such as geothermal and hydro, work in limited areas.  Solar is getting competitive, but offshore wind and CCS are untried, immature and more expensive than their high-carbon alternatives.  And CCS is key to global carbon reduction. Without CCS in a race with solar and wind, we just get delays and empty words. Every time there is a carve-out for some technology or deployment method, a market is being warped, and suddenly the chosen technology doesn’t need to compete and minimize cost in order to “win” (case in point, solar feed-in tariffs in Europe, and more recently, Oregon). Consumers lose and excluded technology development slows down.

    If we focus our efforts upfront on developing economic low-carbon technologies in a competitive marketplace, when push comes to shove, and there is pressure to deploy low-carbon technologies across the world, the lower costs we will have achieved will make it more likely for the developing world to adopt these technologies. Our goal should be for American innovation to reshape the global energy market in much the same way that we drove the computing, telecom and internet revolution.

    Imagine the ‘Googles’ of cleantech ensuring our own energy security, creating sustainable jobs and exporting advanced technologies. The U.S. would take the lead in the worldwide deployment of this new technology and knowledge. Ultimately, to reduce carbon intensity worldwide by 80+ percent, we have to have a diverse arsenal of ultra low-carbon technologies that are economic to deploy, as part of a more efficient economy, be they renewable, CCS or nuclear. 

    No global treaty is going to convince China or India to do what they believe will constrain their growth and their ability to give their citizens a better life. However, in a world where the U.S. (or someone else, if we fail to) designseconomic radical carbon reduction capacity technologies, the developing world will grow into highly efficient, low-carbon economies with no encouragement, because it will make simple economic sense. In fact, they would be at a competitive disadvantage not to deploy them. RES and carbon cap proponents fail to recognize that global adoption of low-carbon technologies is key and just having the U.S. meet some legislated goal will do little. For that, competition and new technologies beyond renewables are essential. In the end, these technologies will make up the Venter-like tool set we need more than any percentage reduction a utility cap offers us. We need a dozen flavors of carbon sequestration, just like we need a dozen flavors of renewables to broaden coverage and applicability of low-carbon solutions to most regions of the U.S. and the world.

    In order to reach that future more quickly, subsidies are a powerful force, but they should not be technology-specific. Each newly emerging ultra low-carbon technology should have access to the same PTCs and loan guarantees.  After all, not every technology will work everywhere, but ultimately you want the most economic ones to win, every time.

    For example, many environmentalists are worried about the risks of nuclear power. I think that’s irrational, but for my part, I seriously doubt that nuclear can compete by 2020 if other technologies had the same financing terms that nuclear loans guarantee.  Many proponents of nuclear disagree on its competitiveness, but it does not matter; if the regulations were in place, the market would decide. Anything could qualify, from solar thermal to an old coal plant retrofitted with CCS. Our country has a patchwork of constantly expiring subsidies and state-level legislation with numerous carve-outs for nuclear, solar, wind, utilities, independent developers and a whole host of other things. Let’s treat mature low-carbon technologies like nuclear to the same financing terms (read: loan guarantees) as all of its competitors. For still-immature technologies (e.g., those with less than five percent to ten percent market share in the utility market), let’s offer extra incentives like ITC and PTCs for seven years (after they start scaling) to offer them an opportunity to gain scale and get market competitive.

    Still, we must create competitive pressure on CCS and all emerging low-carbon technologies to move them forward quickly. A shared market will do just that. That is why a ‘low-carbon electricity standard’ is superior to a ‘renewable electricity standard.’

    In the end, it makes sense to follow in Venter’s footsteps and develop a diverse array of carbon-reduction capacity, across all sectors that emit carbon, from electricity to agriculture.  Each individual technology will need to be at least 80 percent better than current benchmarks.   If we apply that metric to both supply-side energy production and demand-side energy consumption, that combination results in 96 percent lower emissions, or over 20 times the carbon productivity. With all of those pistons firing, you have a fighting chance of hitting an 80 percent total emissions reduction target by 2050, all while allowing for population growth and increased quality of life for billions of people. 

    American technology can address this huge challenge, if only we unleash the power of entrepreneurial energy.  In order to do so, we need a realistic legislative framework to provide certainty, support and the impetus to get us there.

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    The Washington Post / A simpler path to cutting carbon emissions Sat, 03 Jul 2010 03:29:05 +0000 This post also appears in the The Washington Post.

    If our goal is carbon reduction, a cap-and-trade or carbon-pricing bill, with its likely compromises, would be worse right now than no regulation. Pricing carbon below $40 per ton will not change how industry does business or drive adoption of new technologies. With legislation unlikely to support such prices, uncertainty is better than a low price that disincentivizes the development of technologies that have radically less carbon.

    Much as Craig Venter used tools for genome sequencing to outrace the larger, longer and costlier government-sponsored human genome project, it makes more sense to focus over the next five years on the development of carbon-reduction technologies rather than on maximizing short-term emissions reduction. Cherry-picking reductions of 5 to 10 percent through low-hanging efficiency upgrades could distract from developing technologies that reduce emissions 80 percent. By focusing instead on the large wedges that account for 75 percent of carbon emissions — electricity and transportation — we could achieve the lion’s share of our goals with a small fraction of the complexity.

    If we develop low-cost, high-efficiency technologies upfront, we can spark a wave of adoption and create companies and jobs — the Googles of the energy sector. Innovation is America’s natural advantage, one whose fruits we can export worldwide as other countries seek to adopt cost-effective technologies.

    Well-designed legislation to reduce carbon emissions in electricity and petroleum could enable the development of substantially better alternative technologies for 70 percent of our carbon emissions, reducing our largest energy security risks. Consider: Sen. Jeff Bingaman (D-N.M.) has proposed requiring electricity providers to use a minimum percentage of energy from renewable sources. If this standard were modified to allow low-carbon electricity from any source, not just renewable, with carbon emissions that are 80 percent lower than coal, it could get support from nuclear, natural gas and even coal advocates. Opening the playing field like this would increase competition and drive down prices. This would encourage coal with sequestration and nuclear technologies to accelerate development to compete.

    Bipartisan support for such standards is possible because this proposal is not dramatically different from ones by Bingaman, as well as by Sens. Lamar Alexander (R-Tenn.), Jim Webb (D-Va.) and Richard Lugar (R-Ind.). If the proposal passed, we would achieve a technology-neutral, market-based win for climate legislation by reducing emissions from our largest source of carbon. The United States could aim to get 20 to 25 percent of our electricity from sources that use 80 percent less carbon than benchmark coal by 2020, which would meet or exceed the standard set by the House bill passed last June. For utilities, it would reduce uncertainty and encourage investment.

    Importantly, a low-carbon electricity standard would be superior to a utilities cap. A cap can easily be met in the next 10 years by incremental adjustments to existing assets (such as repowering coal power plants with natural gas and shutting the most inefficient plants). In contrast, a low-carbon electricity standard can be met only by the rapid development of radically low-carbon technology; these technologies can then be exported to India and China, which deploy much of the coal-fired electricity. Such a standard would build low carbon capacity the fastest and give the United States a competitive advantage in the emerging low-carbon economy.

    The renewable-fuels standard could likewise be modified to a more technology-neutral low-carbon fuels standard, which would reduce concerns about the impact on the food supply, such as corn vs. ethanol, through diversification. Adopting this standard, as California has, would increase energy security and reduce oil risk — no small feat in light of the threats posed by oil spills and petro-dictators such as Venezuela’s Hugo Chávez or Iran’s Mahmoud Ahmadinejad.

    Meanwhile, regulating cars in technology-neutral effective grams of carbon emitted per mile, instead of miles per gallon, would allow more efficient engines to compete with electric cars. And compete they should, as some engine technologies may deliver more carbon savings at a fraction of the cost of electric vehicles and hybrids. Furthermore, producing non-food biofuels could be the largest source of new jobs and gross domestic product growth in rural America.

    Efficiency is another big lever. Why not set up a “fee-bate system” in which rebates go to those who purchase items that are among the most energy-efficient, be they refrigerators, cars or lighting, while the most inefficient pay fees to fund the rebates? Efficiency standards could update automatically every few years based on the top-tier performers, whose economics and consumer acceptance have been demonstrated.

    Most important, Washington must stop “picking winners.” Tax credits and loan guarantees should be equally available to all low-carbon technologies, be they carbon capture and storage, solar, wind or nuclear. Focus on electric cars and hybrids has already decreased investor interest in more-efficient engines. “Natural gas” trucks are an example of Washington favoring technologies when better paths exist. Why

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    force “repowering” of coal plants with natural gas when one can be technology-neutral, specifying a certain amount of carbon per megawatt hour, or prefer electric hybrids over more cost-effective and efficient hydraulic hybrids?

    Between cleaner electricity and transportation, we can start addressing 75 percent of our sources of carbon emissions, while efficiency improvements will reduce emissions in the remaining 25 percent. In the meantime, we can increase energy security and create competitive American companies and sustainable jobs. Climate change may be uncertain to some, but if we take steps to ensure against nuclear attacks, the disruption of oil supplies and acts of terrorism, why not ensure against climate risk? Such actions would increase competition and decrease long-term energy costs.

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    greentechmedia / What really matters in thin film solar startups? Thu, 17 Jun 2010 00:34:47 +0000 This post also appears on greentechmedia.

    Thin film modules have always promised to disrupt the PV industry landscape because they utilize significantly less material and vastly simpler processing than traditional crystalline silicon panels. Thin films have pushed new cost and scalability frontiers.  Unfortunately, many have relatively low efficiencies and yields. Most current thin-film startup efforts do not appear differentiated enough to justify the hundreds of millions invested in them.

    Today, the industry’s number-one panel manufacturer is a thin-film company, First Solar. First Solar (FSLR) has consistently demonstrated industry-leading manufacturing costs and margins. It has reached module costs of $0.80 per watt and is on a path to $0.50-0.60 per watt, with capex well below $1 per watt that is declining with scale, using a highly replicable production platform. It has grown from 25 megawatts to 1.3 gigawatts of annual production capacity in just five years, while operating with gross margins above 40 percent compared to 20 to 30 percent for most industry companies. With FSLR’s 10 to 12 percent efficiency as the benchmark , any startup, in my view, needs to show 13% efficiency now and a clear path to 15 percent or more efficiency at 90 percent production yield by 2011-12 on large sized monolithic panels to carve out a stable place in the marketplace. Of course they need to concurrently meet FLSR costs too, at much smaller scale (< 100 megawatt) in 2010, unless they have hundreds of millions of dollars of “staying power”.  Only with these targets can they claim “superior technology”.

    Having evaluated dozens of ventures among the 100+ (estimate!) that have started up in the sector and observed disruptive innovations across many industries, I have no doubt that First Solar will face competition more quickly than anybody expects.  New materials, quantum dots, cheaper capital equipment, lower installation costs, fast CVD, nanoparticle coatings, organics, finely controlled bandgap shifting, light splitting into colors, dual and triple junction cells, intermediate band cells, enhanced absorption coefficients, better or cheaper light concentration, wavelength shifting, nanoparticles, even pyro-electric supplementation, foils, flexcells, BIPV and a million other loony or brilliant schemes have all been or are being attempted. Most will fail to meet the cost and scalability challenge, but a few will succeed. In the meantime, more importantly to current investors and to me, it appears that many (most?) of the high profile thin film startups will also fail to get enough of an advantage to overcome First Solar’s head-start on scale, manufacturing optimization, experience learning and cost. They will fail to compete in the near future, and by the time they get to their “second generation,” a new Black Swan improbable pyro-nano-quantum-thingamajig technology will disrupt their new plateau.

    To this point, many of the Silicon Valley thin-film start-ups have raised hundreds of millions of dollars quickly in an attempt to take on the crystalline incumbents and First Solar. Unfortunately, most have suffered serious technical challenges and yield/reproducibility issues, and have been unable to scale up or hit their cost objectives. I believe most, including the most visible ones, are unlikely to.  From an investor’s point of view, it is not fun when a start-up uses $300 million to $1 billion in capital to achieve a $1 billion dollar market cap, as A123 has done and some thin film startups are struggling to do. Raising more venture funding is something that companies boast about, but generally is a negative from the investor’s perspective. It is hard to get  a multiple of invested capital if $300 million to $1 billion has been raised by a thin film startup, to barely get to the incumbents cost structure when Sunpower is  trading at similar valuations. Using three hundred million dollars usually reflects poorly, not favorably, on the management team unless the platform is already in production at high yield on large panels at cost and performance that more than marginally beats the incumbent. I have not yet seen a thin film startup show this kind of cost/performance advantage over FSLR yet.   

    Temporary advantages that short-sighted entrepreneurs target should be approached cautiously even if market entry seems fast.  VCs backed many companies focused primarily on addressing the high cost of poly-silicon that resulted from material shortages starting in 2005.  By 2008, the poly-silicon shortage disappeared, and today the viability of numerous thin film vendors whose business models were based on high silicon prices is in serious jeopardy.   Personally, I don’t think any technology from a startup (leaving aside some larger companies with very deep pockets and operational expertise) below 13 percent efficiency (First Solar++) in 2010 (15 percent by 2011-12) will carve out a sustainable market position in a large niche, no matter what its cost is. The balance of system (BoS) costs, which are about half of the total installed system cost today, simply become prohibitive at lower efficiency. I am even skeptical of some startups expecting to command very high price premiums because they have lower installation costs. A few tens of cents per watt advantage may be conferred or some specialty market niches may make sense but broad market penetration is unlikely. Even BPOS advantages will not support an extra $0.50-100 per wat in larege market segments. Of course, specialty markets such as building integrated photovoltaics (BIPV) or satellite cells have their own set of rules.

    In addition to having undifferentiated products, many thin-film start-ups also suffer from relying heavily on highly customized or self-designed production equipment to deposit the films and reach long term cost targets.  As a result, their capital cost is substantially higher as they struggle to replicate the skills of Applied Materials and other equipment vendors. Just as Applied Materials will struggle to develop a cost-effective solar cell process, solar cell vendors will struggle to develop the equipment expertise that Applied Materials has acquired through decades of learning.  I personally expect that any startup that is developing their own manufacturing equipment will have a large gap between the promise of a technology and delivery time and its reality; those promised cost advantages will be hard to come by.  Anecdotal feedback from the field seems to support this skeptical point of view to date.  To achieve low prices, it is not enough to have low costs; you also need to scale quickly to amortize the massive capital investments required.  Fast growth is only possible with a process that uses tested equipment, and with a proven material supply chain.  An investor must be wary of an overly innovative and complicated process that uses custom equipment or the invention of a new supply chain. Some of the technologies with custom approaches/equipment like the foil guys or other custom cell configurations have ended up with significantly more complex process steps as well as reproducibility and yield issues. This further undermines their ability to hit cost targets/projections and no startup has shown ability to overcome these limitations. Projections are easy but achieving them in unique, complicated processes is hard. If they don’t have 90 percent yield on a 10 megawatt pilot line six months after starting the line, they likely will struggle for a while getting it. On the other hand, a standard process invites direct competition by low-cost producers resulting in severe margin pressure. We at Khosla Ventures have generally preferred large material innovations to equipment/process innovations for this reason.

    Often companies advertise their “champion cells” or their “target efficiency” rather than what their data sheet shows today. Is it circuit efficiency or module efficiency? Is it monolithic and at what yield (read low production cost)? Most PR departments play up these high one-off numbers (claims as high as 14 percent; Stion regularly achieves 15+ percent in 20x20cm modules for specmanship), but in reality their data sheets and shipped product are often at 10 percent to 11 percent.  These are well below my minimal 13 to 15 percent target  for “investments worth considering” (this year, at high yield, on large panels, instead of specmanship of champion cells) that I think is needed to be competitive in any significant solar segment. My advice to investors is to look at datasheet efficiency, process distributions and production yields. First Solar is at 11% today and will likely get to 14% in the next two to four years. Their scale and manufacturing optimization advantages will give them another 25 percent cost advantage over “superior cost” technologies. Any company hoping to compete needs high efficiency at a high yield and low cost in the very near term and a clear path to industry leading costs in the near future. For startups, assume a 20 percent cost disadvantage relative to FSLR when starting up and a 10 to 15 percent decline in costs per year from learning. For experienced semiconductor companies assume a 20 percent cost advantage relative to startups and for large “other non-semiconductor corporates” (like Dow, BASF…) assume a 10-20 percent cost disadvantage relative to startups, all assuming the same technology. Then add fundamental technology cost advantages/disadvantages on top of this “learning curve”. If costs are not around $0.80 per watt  (fully loaded) in 2010-11 at 100 megawatt scale, then I am suspicious the technology can be competitive. Lower balance of system costs (BoS) may allow a technology to be competitive with a few tens of cents additional module cost but not much more.

    The question today as so many companies ramp up production and commercialize their initial products is what technology will meet these challenging criteria?  Although panels based on cadmium telluride (CdTe), First Solar’s core technology, and copper-indium-gallium-selenide (CIGS) technology promise higher efficiencies and competitive costs, I doubt they can beat First Solar at its own game.  10-11 percent efficiency CIGS panel technologies are becoming a dime a dozen and will be in a bloodbath. One particular thin-film company allows for less expensive rooftop mounting for given wind conditions, both of which confer significant advantages to them. If they have a clear path to low cost production at small/medium scale (Personally I do not know enough to comment on their cost structure given it is different but my tests still apply), the company can be successful, but in which market? This company may become a player in commercial rooftop markets with white or highly reflective roofs, but does this market warrant the capital investment of a billion dollars? For many thin film technologies applicability dwindles (for example CdTe panels are not allowed in some European and Japanese markets) and it is likely that use of things like heavy metals will be become even more restrictive in the future and applicable niches shrink as they face the requirements and limitations in the field. For example, some technologies with balance of system (BoS) advantages lose them when they have to comply with California’s seismic requirements, which often trump the wind constraints.

    At a high level, First Solar currently dominates utility-scale solar and faces potential competition from Chinese silicon vendors and CSP at the large plant level (limited to certain geographies). Large commercial rooftop solar is mostly the domain of higher efficiency crystalline silicon vendors such as the Chinese manufacturers (Suntech, Trina, Yingli, etc.), Kyocera, Sharp and Sunpower, with the numerous startups I have discussed challenging them. Investors who don’t  examine the competitive dynamics within each of these sub-segments and determine what type of market value or total equity investment is justified for companies competing in them, fail to do so at their own risk. A careful analysis of the “sub-segment” market sizes and potential for sustainable differentiation is required or investors will be disappointed. There are good investment and segment opportunities but many (probably most) that are being paraded around will fail.

    In the interest of full disclosure, one of our portfolio companies, Stion, has produced one of the highest performance thin-film solar panels with significantly less time and money than its competitors.  On less than $50 million spent, including capex and pilot lines, they are producing 120 and 130 watt panels, and yielding to 13 percent efficiency, 2 ft x 5.5 ft panels made using monolithically integrated circuits, and have exceptional yields and process distributions.  To me, demonstrating repeatable results on commercial-scale product is much more meaningful than one-off champion results that are not reflective of production. Stion’s efficiency advantage will make it competitive for the time being, and its product also has other significant advantages such as a lack of cadmium (an issue for First Solar in some markets) and superior aesthetics (which Sunpower has effectively leveraged).  But to me even that may not be enough to justify a billion dollar capital raise that many other thin film companies have jockeyed for and received (you can always generate a small fortune if you start with a big one. The real question is, how good are the returns?). Fortunately Stion is able to get to positive cash flow on about $100 million in equity, about the same as a typical chip startup takes. I wonder if even Stion is competitive enough in big enough niches to be viable, and as a result I had personally encouraged the company not to go into production even with this “best in class” 13% thin film technology which they are already yielding very well on. Therefore I encouraged them to take a licensing strategy for this segment to gain additional capacity at little or no capital cost as their technology license fee.

    So why did we invest in Stion when I am skeptical that any current thin film company can compete with First Solar beyond an interim 2-3 year period? To achieve sustainability one needs real, long term differentiation! It’s because Stion is developing a multi-junction (tandem) product that can compete with all the incumbent silicon (not thin film) players by matching the efficiency of silicon cells with the costs of thin film. That upside gives the company “legs” beyond the first few years of sprint, and I think every company needs to have a similar, short term, vector for future improvement.  Otherwise, they will be resigned to the world of low margin bloodbaths in an oversupplied market with few sustainable advantages. Stion has demonstrated a >15% efficiency “tandem junction” technology at prototype scale (20 cm x 20 cm fully integrated circuit) which will allow it to become directly competitive with silicon panels in efficiency, and eventually challenge the Chinese silicon solar vendors and SunPower’s industry-leading efficiencies (18-20%) at about half the cost.  Given the strong leadership position First Solar has established, it will be virtually impossible to challenge them with anything less.  And even with what Stion has accomplished, the risk exists that some clever technologists re-invent silicon or jump ahead with a Black Swan… and there are more than a few attempts at doing just that. Happily, innovation in solar is thriving and will continue to do so, and today’s impossible is tomorrow’s conventional wisdom, so don’t underestimate what types of cost and performance targets this next wave of technology could hit.

    With all of this in mind, here is a good checklist for what I think makes a thin-film solar cell company both a competitive presence in the market and a viable investment opportunity:

    • High efficiencies (13-15 percent) on commercial-scale modules at 90 percent yield or greater in 2010-11 in first production line.
    • Capital costs below $1 per watt on the first 100MW line (and declining from there), and a production platform that leverages proven equipment
    • Panels made using larger (than FSLR) monolithically integrated circuits as opposed to small unit cells, which generally have higher costs as well as significant manufacturability and performance issues
    • Designs that drive installation and BOS costs lower.
    • Advantages that are particularly valued by a substantial market; e.g., a uniform, all-black panel with superior aesthetics makes a big difference in the residential market. (Likewise, pay attention to potential disadvantages for markets.)
    • Attributes that exclude others from a substantial market; e.g., completely cadmium free / lead free product is critical for some geographies. (Likewise, pay attention to attributes that may outright ban it from markets, now or in the future.)
    • DOE loan guarantees are usually a good thing but only if the company has an economic product and is ready to scale. I would not interpret a DOE loan guarantee as “validation” of costs or a reason to IPO. Would you rely on somebody in government to understand the dynamics of competitive costs in the global marketplace? Nor would I rely on bankers offering IPO’s to have validated a technology either, especially if they are getting commissions for the deal.  Also remember that a big loan gets the treadmill running and cash flowing out to repayment of the loan. Great product margins are the only source of cash for paying off a big loan (without dilutive equity raises).
    • If the total equity in a company is approaching $500m prior to production startup, I would ensure that the startup is going to beat the pants off First Solar, Chinese low cost Si, and solar thermal in utility scale installations. Otherwise it is going to be a successful niche play and deserves a niche company valuation. Bear in mind that Sunpower is among the largest niche players and even its valuation does not justify a billion dollars of investment.

     2010 and 2011 will be a very interesting growth phase for the more recent entrants into the PV arena.  Many of them will not raise adequate funds to continue their development and scale-up efforts, and will fail. Others will be acquired; a fair degree of consolidation is likely amongst the marginal or poorly differentiated players and half a dozen players will have10-13% thin film cells that need “elusive” scale to reach costs targets and “when at scale/maturity” will remain “when’s” while cash flow hemorrhages..  In the end, for the current thin-film players missing efficiency targets by just 1 point translates into 10 percent+ cost bump in an increasingly competitive 20-30 percent margin business. Innovative startups may re-invent silicon technology but probably only if efficiencies of 25 percent or more are achieved. Today’s conventional wisdom targets are the wrong ones for them to shoot at.

    Over time, Chinese manufacturers are likely to gain market share as they continue to drive costs down.  Very little innovation seems to be happening in Europe (likely due to the economics of feed-in-tariffs that are only now starting to be updated in some countries).  A few large companies that have recently entered the market with aspirations to become global leaders, will be relegated to fairly narrow niches. Those DOW-like promises of building integrated solar will die as the big behemoths fail to keep up with small innovative competitors. The more than 200 PV companies in the world today will undoubtedly shrink, while a select few new entrants will break away from the pack based on superior cost and products, and join the heated battle for market share that is already taking place among established incumbents. There are other niches which will continue to develop, like the 25-40 percent+ efficiency cells usually made out of exotic materials.  Silicon vendors will generally start declining rapidly by 2015 unless they re-invent silicon, and get well above 20 percent efficiency cost effectively. The high concentration based 40% efficient multijunction cells will stay in the high concentration niches unless they offer 25-35% efficiency at “one-Sun silicon $/watt” costs. Yes, this is possible and companies are already attempting this seemingly impossible feat.  And no, I am not bullish on high concentration solar.  Low concentration solar for utility markets may work well with high efficiency silicon or next generation cells at low enough costs, though they will face stiff competition from incumbents and may need to be creative in their value proposition.  

    So my last words to startups: be competitive with silicon cells at thin film costs or be competitive with III-V cells (well over 20 percent) at silicon costs. Then you have a 50/50 chance of making it. But a billion dollars of capital and billion dollars of debt will be hard to pay off.

    PS: Those of you who will critique me for having my views match our companies’ strategies; I suggest that we invested in companies that match our views and not the other way around.



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    Gene pool engineering, cycle times and risk Wed, 26 May 2010 00:35:21 +0000 In this video, hear Vinod Khosla as he discusses gene pool engineering, cycle times and risk. 



    Gene pool engineering

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    Toughing it out to glory Wed, 26 May 2010 00:23:23 +0000 In this video, hear from Babu Mandava, the CEO of Beceem Communications — a 4G semiconductor company that builds mobile broadband chips (65% market share in 2009), as he discusses the challenges of building a company.



    Toughing it to glory

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    Entrepreneur stories Wed, 26 May 2010 00:11:29 +0000 In this video, hear from Jack Dorsey, the CEO of Square, and Jagdeep Signh, CEO of QuantumScape as they tell stories of entrepreneurship.



    Entrepreneur’s tale

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    People, leadership and startups Tue, 25 May 2010 23:57:04 +0000 In this video, hear from Bill Campbell, a board director of Intuit and Apple.



    People, leadership & startups

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    Solum: Making agriculture easier and more productive Tue, 25 May 2010 23:46:13 +0000 In this video, hear from Nick Koshnick, co-founder and CEO of Solum, as he explains soil testing and why it’s important. 



    Out of the box

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    Speaking with authenticity and charisma Tue, 25 May 2010 23:36:54 +0000 In this video, hear from Nick Morgan, president of Public Words, as he discusses how to find clarity in ideas and deliver them with panache.



    Speaking with authenticity & charisma

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    From one entrepreneur to another Tue, 25 May 2010 23:16:46 +0000 In this video, hear from Vinod Khosla as he provides an anecdotal retrospective of his work.



    From one entrepeneur to another

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    CEOs as chief risk mitigation officers Tue, 25 May 2010 22:53:00 +0000 In this video, hear from KR Sridar, founder and CEO of Bloom Energy, as he discusses risk management.



    CEOs as chief risk mitigation officers

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    Risk management Mon, 10 May 2010 00:38:15 +0000 In this video, hear from Vinod Khosla as he discusses risk management.



    Risk management

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    Hoover Institute / Energy transformation Sun, 02 May 2010 01:07:09 +0000 In this deck, get Vinod Khosla’s take on entrepreneurship and how it can transform sustainable energy.  ]]> 0 Project Rifle: A quantified decision making framework Tue, 02 Mar 2010 01:37:12 +0000 In this deck, get Vinod’s take on RIFLE strategy, a quantified decision making framework.

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    The risk matrix Tue, 02 Mar 2010 00:47:28 +0000 In this deck, get the KV perspective on how we assess risk.

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    Green@Google / Renewable energy, maintech not cleantech Fri, 22 May 2009 05:57:46 +0000 In this video and the accompanying deck, Vinod Khosla discusses sustainable energy.



    Green@Google: Vinod Khosla

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    Harvard Business Review / Reasons for long-term optimism about technology and the economy Tue, 02 Dec 2008 04:59:26 +0000

    This article is also published by Harvard Business Review

    A Conversation with Vinod Khosla by Alison Berkley Wagonfeld

    From Vinod Khosla’s perspective, the world’s economic future looks bright. After cofounding Sun Microsystems and spending two decades as a venture capitalist with Kleiner Perkins, Khosla created his own venture firm in 2004 to invest in early-stage technologies, especially those with minimal environmental impact. Khosla Ventures, based in Menlo Park, California, has a portfolio of some 65 start-ups, 45 of which are in clean technology, or cleantech. The latter range from Kior, a speculative biofuels company, to Ausra, which is developing utility-scale solar thermal technology. Khosla’s goals include turning niche cleantech forms of energy into what he calls “maintech” by proving that green technologies can be economically cheaper than current ones.

    Do you see the current downturn differently from how other people do?

    Economists don’t appreciate the extent to which innovation can disrupt assumptions. A new technology can render forecasts obsolete. We are investing in many such technologies, and some of them will surely succeed. I live by an idea from the computer pioneer Alan Kay, who said, “The best way to predict the future is to invent it.”

    The technologies we’re working on have the potential to affect energy prices and thus geopolitics and poverty, not to mention global warming. But the impact won’t be immediate. Many of the technologies are in early stages and face significant hurdles before they can become operational. The economists may be correct that in the near term, at least, the cost of inputs will continue to rise. But the specific critical technological events that will truly determine future economics are impossible to predict.

    Which technologies give you the greatest hope?

    While home rooftop solar photovoltaic cells will continue to improve, I’m excited about solar thermal’s ability to compete cost-effectively with utility-scale power from coal and natural gas plants. Many of our investments are in biofuels, which I’m very positive about because they have low financial and adoption risks. We look for technologies that don’t require people to change their driving, transportation, and heating patterns. Within 25 years, I believe the world will be able to replace most fossil fuels with nonfood biomass and waste or with solar, geothermal, and wind energy. There is no question in my mind that biofuels can be produced for a dollar per gallon, probably much less.

    In the U.S., for example, the acreage that is currently out of production or devoted to export crops is more than adequate to supply the country’s biofuel needs. If we innovate in biomass production, my analysis shows that we may need zero additional land to replace all our gasoline. The biofuels I’m referring to are cellulosic, such as forestry waste and winter cover crops—maybe even algae someday—but not corn, which cannot scale up to meet the world’s energy needs.

    Will the world’s current financial state delay development of some critically important technologies?

    I do worry about that. Energy and cleantech companies require plenty of follow-on financing. Combine the current state of the capital markets with the risk aversion we are seeing among other investors in this space, and there’s real reason for concern. I also worry about governmental policies, both in the U.S. and elsewhere. The traditional enemies of alternative energy—the coal and oil industries—are fighting change. However, policy is gradually moving in the right direction, and the entrenched industries will adapt, because the global imperative is immense. The world is witnessing an unusual confluence of natural, geopolitical, and technological factors that are pulling in the same direction, away from fossil fuels and toward alternatives. I believe there will be many energy and cleantech successes, not just from the companies we’re working with. In addition, traditional energy companies will participate actively as investors and implementers.

    There’s always another worry, too—that our firm might be dead wrong about its investments. There are no historical rules on what will and won’t work. But we believe that the freedom to fail gives us the freedom to succeed. We are willing to take risks because we believe the opportunities are so exciting. I am a technology optimist. A lot of what can be imagined can be invented.

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    Stanford University / The black swans of energy invention Thu, 23 Oct 2008 04:56:00 +0000 In this podcast with the Stanford Entrepreneurship Corner, hear from Vinod Khosla as he shatters conventional wisdom on energy reduction and instead encourages entrepreneurs to solve environmental problems via cost-effective, innovative and scalable engineering.


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    Renewable Energy: An investment perspective Thu, 02 Oct 2008 05:46:53 +0000 In this deck, Vinod Khosla shares his perspective on renewable energy.

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    Concentrating solar power (CSP) and concentrating photovoltaic (CPV): Opportunities and issues Thu, 02 Oct 2008 01:42:39 +0000 In this deck, get Vinod Khosla’s perspective on sustainable energy sources. 

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    Algae conference / What will it take? Thu, 02 Oct 2008 01:17:11 +0000 In this deck, get Vinod Khosla’s perspective on sustainable energy. ]]> 0 Biofuels: A case study Tue, 02 Sep 2008 01:18:58 +0000 In this deck, get Vinod Khosla’s perspective on biofuels.

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    The device that used to be your phone Wed, 02 Jan 2008 06:16:29 +0000 In this deck, Vinod Khosla shares his views on the future of mobile. 

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    Pragmentalists vs. environmentalists (part I): Prius – green or greenwash? Wed, 02 Jan 2008 03:22:42 +0000 What is the actual impact of hybrids? In this paper, we are will analyze hybrids, ranging from the conventional Toyota Prius to fashionable plug-in hybrids. Our focus here is on highlighting the actual carbon emission reduction of hybrids (particularly vis-à-vis biofuels), and discussing the best possible solutions to reduce these emissions at a reasonable cost both in the near and long-term. We object to greenwashing (powered by large marketing machines) that obfuscate the facts that suggest hybrids can solve our problems. Corn ethanol, which has been heavily maligned in the mainstream media, reduces carbon emissions (on a per mile driven basis) by almost the same amount as today’s typical hybrid. Despite the similar environmental profiles – one is a media darling, and the other is maligned despite its much more competitive economics (not that we are advocating corn ethanol). We believe that corn ethanol is paving the way for cellulosic ethanol, which will prove to be a cleaner and cheaper source of our transportation fuel needs for the foreseeable future – the table below provides a quick summary of our in-class comparisons (more detail later in the paper). In the long run, we don’t need to worry about corn ethanol – cellulosic ethanol will be cheaper within a few years and will replace it (and other food based fuels like classic biodiesel)…

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    Policy and perspective: The scoping plan for AB 32, and how to do it right Wed, 02 Jan 2008 03:11:05 +0000 Science can be precise but inaccurate, resulting in wonderfully precise yet completely misguided results from a policy perspective. Similarly, econometrics modeling can paint a picture with a limited, narrow range of possibilities (aka “low standard deviation”) with a significant mistake around the mean value (“high standard error”). In the debate ranging about biofuels today, both problems persist in different manifestations – among the recent papers influencing current debate (especially around the AB32 scoping plan being considered in California) are articles by Professor Timothy Searchinger1 arguing that biofuels harm carbon emissions more than they help, and a recent letter2 by a group of distinguished academics (Delucchi et al) arguing for strong consideration of biofuels’ indirect land use change (iLUC) in the development of California’s Low Carbon Fuel Standard. Both are ground in solid science, well‐ intentioned pieces that are intended to inform the debate – unfortunately, both fall into the trap of inaccurate modeling nonetheless conducted to a high degree of precision; they provide a false sense of knowledge to the debate that can mislead policy making. My focus here is on explaining why they are wrong for the intended purpose of policy making, and to illuminate more important issues they fail to consider, besides having model input assumptions that are both likely to be wrong as currently used and that can be dramatically changed by policy signals…

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    Breaking the climate deadlock: Scalable electric power from solar energy Wed, 02 Jan 2008 01:46:17 +0000 Breaking the Climate Deadlock’ is an initiative of former UK Prime Minister Tony Blair and independent not-for-profit organisation, The Climate Group. Its objective is to build decisive political support for a post-2012 international climate change agreement in the lead up to the 2009 UN Climate Change Conference in Copenhagen. Its particular focus is on the political and business leaders from the world’s largest economies, particularly the G8 and the major developing countries. The initiative builds on Mr Blair’s international leadership and advocacy of climate change action while in office, and The Climate Group’s expertise in building climate action programmes amongst business and political communities.

    This briefing paper and its companions were commissioned by the Office of Tony Blair and The Climate Group to support the first Breaking the Climate Deadlock Report…

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    The architecture of audacity Tue, 02 Jan 2007 04:56:03 +0000 In 1997, a dozen heads of state  joined almost 3,000 participants from 137 countries in Washington, D.C. for the world’s first Microcredit Summit. During the summit, all agreed on an audacious objective: to reach 100 million of the world’s poorest  families, especially the women of those families, with credit for self-employment and other financial and business services by the end of 2005. Now, almost 10 years later, we take stock of the Microcredit Summit Campaign (also called the MCS Campaign, the MCS, or “the Campaign”) and its efforts to reach this goal by examining its history, its impact so far, and the path forward.

    The Campaign’s most recent published report states that by the end of 2005, 3,133 microfinance institutions  (MFIs) had reported reaching over 113 million clients, 82 million of whom could be classified as “poorest” when they took their first loan. Of these poorest clients, almost 85% were female. Based on the MCS’s calculations, and assuming five persons per family, the 82 million poorest clients reached by the end of 2005 had an impact on approximately 410 million family members. These results are quite close to the Campaign’s goal—and they probably underestimate the total served by microfinance globally, based as they are on data from only those MFIs that have reported to the MCS.

    This paper assesses the Microcredit Summit Campaign as an international social movement.  We describe how, in this instance, a bold commitment translated over the period of a decade into action at a global scale, and became manifest in the development of a complex and collective network. This network has provided the social and political capital necessary for different members of what was once a new field to mobilize resources and areas of support, and ultimately realize the Campaign’s goal. We differentiate between two aspects of the Campaign: it is both an organization that has played a leading role in leveraging new ideas and transforming microcredit’s role in international  development, and a collective social movement that draws critically on all its participants to create enduring change in the microfinance field…

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    Green investing strategies Tue, 02 Jan 2007 03:26:52 +0000 At Khosla Ventures, we offer venture assistance, strategic advice and capital to entrepreneurs. In particular, the firm helps entrepreneurs and supports breakthrough scientific work in clean technology areas such as bio-refineries , bioplastics, water, materials, solar,  geothermal, battery, engines and many  other environmental areas. From a green perspective, there are four major areas of investments that we focus on: (1) oil use reduction (2) cleaning up coal based power generation (3) higher efficiency devices and equipment, and (4) new materials to replace petroleum based plastics, carbon intensive building materials, and clean water.

    Given the basic areas of investments, here we discuss the specific questions that we ask ourselves before any investment – and the rules that we apply in our decision making process. In the following pages, we outline Khosla Ventures’ perspective and criteria for differentiating good investments from good, sustainable “climate change” solutions – in particular, detailing the quasi- checklist that we’re looking for in any idea. Our goal is to tackle the major carbon dioxide emitters in the US (and the world)…

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    Wired / My big biofuels bet Mon, 02 Oct 2006 04:04:48 +0000

    This article also appears in Wired

    The road to energy independence starts in a cornfield in Nebraska. Venture capitalist Vinod Khosla explains why he’s betting on biofuels.

    It may surprise you to learn that the most promising solution to our nation’s energy crisis begins in the bowels of a waste trough, under the slotted concrete floor of a giant pen that holds 28,000 Angus, Hereford, and Charolais beef cattle. But for some time now, I’ve been searching for a renewable fuel that could realistically replace the 140 billion gallons of gasoline consumed in the US each year. And now I believe the key to producing this fuel starts with cow manure – because this waste powers a facility that turns corn into ethanol.

    I’m standing on a grassy hill in the middle of an 880-acre commercial feedlot just outside Mead, Nebraska, which is a long way from my home turf of clean labs and wood-paneled conference rooms in Silicon Valley. In front of me are four open-air cattle sheds. Each is the width of a giant barn and a full half-mile in length. From up here, they look more like jumbo-jet landing strips than animal pens. Beyond the sheds are several hundred acres of cornfields, from which much of the animals’ feed is harvested.

    It may look like a typical, if huge, cattle feedlot – but for the glittering white four-story structure below that resembles the Centre Pompidou in Paris. Indeed, until recently this operation just off Mead’s County Road 10 was not unlike any other finishing ground for Nebraska’s beef cattle: a last stop before the abattoir. But starting in November, Oscar Mayer will no longer be the marquee product here. A company called E3 Biofuels is about to fire up the most energy-efficient corn ethanol facility in the country: a $75 million state-of the-art biorefinery and feedlot capable of producing 25 million gallons of ethanol a year. What’s more, it will run on methane gas produced from cow manure. The super-efficient operation capitalizes on a closed loop of resources available here on the prairie – cattle (fed on corn), manure (from the cows), and corn (fed into the ethanol distiller). The output: a potential gusher of renewable, energy-efficient transportation fuel.

    Of course, 25 million gallons of ethanol is a drop in the tanker when it comes to our 140 billion-a-year oil habit. And ethanol itself is a subject of controversy for all sorts of reasons. Many of the criticisms, while true in some small ways, are aggressively promoted by the oil lobby and other interested parties in an effort to forestall change. Most are myths. Challenges certainly exist with ethanol, but none are insurmountable, and – with apologies to Al Gore – the convenient truth is that corn ethanol is a crucial first step toward kicking our oil addiction. I believe we can replace most of our gasoline needs in 25 years with biomass from our farmlands and municipal waste, while creating a huge economic boom cycle and a cheaper, cleaner fuel for consumers.

    Which is why this Mead, Nebraska, farm is so exciting to me: The ethanol made here is not only clean but also cheap – this is perhaps the first ethanol plant to achieve both. More important, it is an early demon­stration of the great potential of biohols – liquid fuels derived from biomass for internal combustion engines. The facility is the first data point in what I call the biohol trajectory. (See “March of the Biohols,” page 143.) Like Moore’s law, this trajectory tracks a steady increase in performance, affordability, and, importantly, yield per acre of farmland. A number of biohols appear along this performance curve, among them corn ethanol, cellulosic ethanol, higher-energy-content butanol, and other biomass-derived fuels that are even more energy-rich than butanol. We’ll see fuels with higher energy density and better environmental characteristics, and we’ll develop engines better optimized for biohols. Ethanol and the newer fuels will yield better fuel efficiency as innovations like higher compression-ratio engines make their way into vehicles. In addition, we can count on the emergence of complementary technologies like cheaper hybrid vehicles, better batteries, plug-in hybrids, and more efficient, lighter-weight cars.

    But the single most critical variable in the biohol trajectory is the coming rise in the number of gallons of fuel produced per acre. As we migrate from biomass derived from corn to biomass from so-called energy crops like switchgrass and miscanthus, I estimate that biomass yield will reach 20 to 24 tons per acre, a fourfold increase. At the same time, new technologies will enable us to extract more biohols from every ton of biomass, potentially to 110 gallons per ton. The result: We’ll be extracting 2,000 to 2,700 gallons of fuel per acre (as opposed to about 400 gallons with today’s technology). With better fuels and more-efficient engines improving mileage by about 50 percent, we can safely predict a seven- to tenfold gain in miles driven per acre of land over the next 25 years. Given this biohol trajectory, a future of independence from gasoline becomes not only possible but probable. And the trajectory begins with garden-variety corn ethanol.

    We learned to formulate corn ethanol way back – it’s nothing more than moonshine. What makes the E3 Biofuels facility so novel isn’t its spectacular equipment but the way the equipment is fueled. The most important structures here happen also to be the least beautiful: a pair of four-story, 4 million-gallon fuel tanks, each filled to the brim with cow manure. Historically, ethanol plants were fired by coal or natural gas. But methane, produced from manure, powers this operation. Not only do no fossil fuels go into the plant, very little pollution comes out. It’s nearly a closed energy loop (some corn has to be bought from other farms).

    E3 Biofuels achieves what’s known as a positive energy balance. For every BTU of energy used to run the ethanol plant, five BTUs are produced. A typical corn ethanol plant produces 1.3 to 1.8 BTUs for every BTU of fossil fuel input, including the energy required to grow the corn. (Gasoline has half the efficiency of corn ethanol, producing 0.8 BTUs for every BTU input.)

    Here in Mead, almost nothing goes to waste: Components of the corn kernel that aren’t good for ethanol – the protein – are valuable additions to the cattle feed. The biodigestor waste left after methane production from cow manure is processed to produce ammonia fertilizer for the cornfields. The system is also environmentally friendly. Normally, groundwater pollution from cattle feedlots is a serious problem. But the process of producing fertilizer from the cattle manure keeps the phosphates out of the groundwater. Significantly, the energy system also prevents the venting of methane into the atmosphere, which is notable because methane is 23 times worse than carbon dioxide as a greenhouse gas. Another benefit: Even under a blazing mid-August sun, I can barely smell the cattle.

    I became familiar with ethanol in 2003, when a business plan for a startup called BCI (now known as Celunol) crossed my desk. I had begun to look into alternative fuel technologies, but I couldn’t get comfortable with the economics of some of the trendy clean-energy technologies like hydrogen fuel cells.

    I was impressed with Celunol’s technology for producing cellulosic ethanol (made from the cellulose, or “stalk,” of a plant rather than the sugar or starch “seed”), but I didn’t think the business was commercially viable. Still, I couldn’t bring myself to toss out the plan. It sat on a corner of my desk for nearly 18 months while I read everything I could about petroleum and its alternatives and what it would take to produce a replacement fuel for gasoline from a renewable resource.

    In 2004, I began hearing about the ethanol market in Brazil, where the government had been unsuccessfully promoting ethanol cars. Consumers wanted a car that could use the much cheaper ethanol fuel but were reluctant to get locked into using ethanol only. When a car that offered the choice of either gasoline or ethanol as a fuel was introduced in 2003 by Volkswagen, sales took off, far surpassing expectations. Today, more than 70 percent of new cars sold in Brazil are so-called flex-fuel vehicles, which can run on gas or ethanol; three years ago, less than 4 percent of new cars were flex-fuel vehicles.

    Brazil’s example made me think that replacing oil in the US was plausible, perhaps even possible. How, I wondered, could the possible be turned into the probable? Naturally, the US market is significantly different from Brazil’s. US consumers use six times as much oil as Brazilians per capita. Brazil gets its ethanol from sugarcane, but the US can’t grow much sugarcane (which has an exceptionally high energy efficiency) in our climates. Still, considering the technological creativity and capital at our disposal, I felt certain that the most powerful country in the world could achieve something a country with an economy one-eighth our size had successfully embarked on.

    The business opportunity loomed as large as anything I’d ever seen. The key to turning the possible into the probable – and dislodging the oil companies – would be to convince Wall Street that there were substantial profits to be made. To me, it seemed ethanol and other biohols could eventually replace all our gasoline needs – and they would not need subsidies to outcompete fossil fuels. Just because ethanol gets subsidies doesn’t mean it needs them. Biohols were the only kind of alternative energy that I believed met two essential criteria: They would scale to solve a material problem, and they could economically compete with fossil fuels without subsidies. In 2004, I formed Khosla Ventures. One of our early investments was Celunol.

    When it comes to technology, the best way to change the world is not by revolution but by evolutionary steps. Change must follow from step to step, from innovation to innovation, as technology matures, each step justifying its economic viability and attracting investment. So while ethanol may not be ideal, I’m convinced it’s the best first step on the biohol trajectory. Ethanol offers one thing no other oil substitute can: a clear path from where we are to where we hope to be.

    There are other scenarios we can imagine – say, wind-driven hydrogen generators powering our cars – but they are just that: blue-sky flights of imagination from academics and dreamers with no notion of reality. Then there are those tunnel-vision skeptics who refuse to believe that there is a trajectory to energy independence. I invite those folks to sit on the sidelines and watch the show or to go work on a better solution. Twenty-five years ago such doubters were dismissive of personal computing, the Internet, and biotechnology.

    Ethanol is the first step on the biohol trajectory for three reasons. The first is economic: Ethanol can be produced and sold cheaper than gasoline. Most ethanol facilities can produce their fuel for about $1 a gallon – almost half the production cost of gasoline. And innovative producers like E3 Biofuels claim to make it for 75 cents a gallon. It’s true that American ethanol today benefits from agricultural subsidies for corn farmers. I would like to eliminate ethanol subsidies gradually in conjunction with the removal of tariffs on imported ethanol. For kicks, we might consider removing the substantial direct subsidies to oil, too. Free markets demand level playing fields.

    Meanwhile, ethanol at the pump can be relatively cheap. Recently, in Aberdeen, South Dakota, E85 – a blend of 85 percent ethanol and 15 percent gasoline – was selling at gas stations for just $1.95 a gallon. Wal-Mart is now considering selling it. Imagine if every Wal-Mart offered $1.99-a-gallon fuel! The switch to cars and trucks that can run on E85 would be relatively economical, too. There are already 6 million such flex-fuel vehicles on the road in the US. It costs a paltry $35 to make a new car capable of handling both ethanol and gasoline.

    The second reason is scientific: New breakthroughs make it eminently feasible to scale up ethanol to national and even global proportions. Today, corn yields about 400 gallons of ethanol per acre of cropland. While corn yields will increase over time thanks to genetic modification (a new variety from Monsanto may yield 750 gallons per acre), corn can get us only so far. The real promise for ethanol lies in cellulose, which can be derived from plants like switchgrass and miscanthus, a tropical grass native to southeast Asia. Cellulosic ethanol technology promises to deliver as much as 2,700 gallons per acre by 2030. This is the key to achieving scale, substantially lower costs, and manageable land-use scenarios. Biotechnology, plant breeding, chemical process technologies, synthetic biology, energy crop engineering, systems biology, computational modeling, and new fuel chemistries will all offer tools, approaches, and possibilities for improvement. Failure to use them will be a failure of imagination.

    The third reason is pragmatic: Ethanol is already here – and in use! We know how to produce it, we know how to distribute it, and we already have cars that can use it. So why reinvent the wheel? Today in the US, there are 925 stations that dispense E85. Expanding that number to just 20,000 would be sufficient to make E85 broadly available – an investment I estimate at much less than a billion dollars. Just the subsidy decrease I have proposed would more than pay for this infrastructure. The sooner E85 corn ethanol primes the alternative-energy pump, the sooner we can progress to the next steps on the biohol trajectory. Several entrepreneurs are already working on cheaper, more energy-efficient biofuels that will ultimately replace corn ethanol. Mascoma, one of my investments, is developing new cellulosic ethanol technology. Richard Branson’s Virgin Group is engineering an ethanol-like fuel robust enough for jet engines. Greenfuel Technologies is harnessing algae farming for ethanol and biodiesel production. Human genome pioneer J. Craig Venter is busy developing a synthetic chromosome that may be able to produce ethanol. Another Khosla Ventures company called LS9 is applying synthetic biology to produce a new biofuel.

    All of these fuels will be derived from biomass, share similar manufacturing and distribution processes, and power improved internal combustion engines, so all of them will benefit from the trailblazing, market acceptance, and established infrastructure of corn ethanol.

    There is a problem, however. There are folks who don’t want us to have cheaper alternatives, at least not quickly. With the oil companies and their nearly unlimited financial and political resources fighting the development of new fuels, and in the absence of any sort of national Manhattan Project for energy, a new Silicon Valley of energy development has yet to get off the ground.

    The oil interests fought the increased mileage requirements for new cars and trucks. They lobbied Congress for tax breaks and environmental waivers. Oil companies have received direct subsidies that add up to more than $120 billion, according to the General Accounting Office, and substantially more in indirect subsidies. When the EPA decided that the lead in gasoline was a serious health hazard and pushed for its removal, the oil companies spent millions fighting the change.

    Today they are fighting for waiver from MBTE pollution liability and avoiding responsibility for carcinogenic benzene in our air. When municipalities in California decided to purchase cleaner natural gas buses, the diesel industry sued to block the switch. At every turn in the history of our oil dependence, the oil companies have spent their considerable fortune to make sure that we as a nation remained dependent on oil. They did this in large part by lobbying Congress, by providing congressmembers with large amounts of campaign cash, and by trying to suppress cleaner, cheaper alternatives to oil. I hope they realize soon that alternative energy is a major business opportunity for them.

    In November 2005, at the invitation of a number of environmentalists, economists, and the National Resources Defense Council, I agreed to support California ballot measure 87, which will be put to voters in the November 7 statewide election. The measure proposes to charge oil companies a fee on oil they extract from California state lands. (Oil companies pay such a fee in every other major petroleum-producing state. They are fighting hard not to pay their fair share in California.) The proceeds – estimated at $4 billion by 2017 – will principally go toward reduction of petroleum use and to promote research in alternative energy technologies at universities.

    Critics of Prop 87 like to point out that Khosla Ventures stands to benefit financially if the measure passes. I have committed to donate all of my profits from any company that receives money from this initiative just so we can focus the campaign on the real issues.

    More than a million Californians signed the petitions to put Proposition 87 – the Clean Energy Initiative – on the California ballot. If enacted, it’s estimated that the measure will reduce the state’s dependence on oil by 25 percent over the next 10 years. But the money put into alternative energy research will benefit not only California but the whole nation. Besides providing a role model, California’s reduced oil demand will decrease gas prices nationwide. The technologies and companies that emerge will change the US and the world, making clean technology economical everywhere. Prop 87 will not raise gas prices as the oil companies would have you believe. Market forces ensure that world oil prices, not production costs in California, determine gas prices. Besides, the California attorney general has confirmed that Prop 87 makes it illegal for oil companies to raise gas prices or pass the fee on to consumers. The US Supreme Court has already ruled that states can prohibit oil companies from passing drilling fees on to consumers. But oil company dollars in a massive advertising campaign will try to scare consumers into believing otherwise.

    The oil companies are hiding behind the moniker Californians Against Higher Taxes, a group funded almost completely by oil companies and that has so far taken in more than $30 million to campaign against the measure. It’s going to fight Prop 87 tooth and nail. Prop 87 is clearly the David in the fight against Goliath. We have no illusions about what we’re up against. We have 138,000 troops in Iraq, gas is $2.85 a gallon, and 90 percent of Californians live in places that don’t meet federal air quality requirements. And global oil production can’t keep up with rising demand from countries like India and China.

    By forcing the oil companies to finally pay their fair share, Proposition 87 will help launch the next Silicon Valley phenomenon, the Googles and Yahoos of clean technology. These new energy companies will go on to create jobs, wealth, and economic growth everywhere. And they will help change the planet’s destiny.

    In the corner of an unmarked warehouse tucked away in an industrial neighborhood north of Denver, a new company called Kergy has what is, to my knowledge, the first anaerobic thermal conversion machine (which explains why Khosla Ventures is a seed investor). It’s a 6- by 4-foot contraption that stands about 8 feet high. It looks vaguely like a souped-up potbellied stove. But it runs cleanly enough to operate indoors.

    Kergy’s machine is special because it makes cellulosic ethanol through anaerobic thermal conversion rather than through fermentation or acid hydrolysis. It does not need organisms or enzymes to do its work. Biomass is heated in an oxygen-free environment to produce carbon monoxide and hydrogen. Once that happens, “the world is your oyster,” says Bud Klepper, the engineer who invented this device. The carbon monoxide and hydrogen are then reconstituted into various alcohols – like ethanol. Better still, fermentation and acid hydrol­ysis can take days to occur, but thermal conversion breaks down organic matter and converts it to ethanol in minutes.

    And here’s the really exciting part: Because all organic matter contains carbon, Klepper can make ethanol out of cellulose or any form of organic matter. This means the usual suspects such as corn, switchgrass, sugarcane, and miscanthus but also any waste product such as wood chips, paper pulp, cow manure, and even human waste. Municipal sewage has been tested already, as has hog manure. “We could double the ethanol output of the Mead facility,” Klepper says. It’s a big leap forward on the biohol trajectory, and it is right in front of us.

    And cost is a big advantage. “Our ethanol from biomass should be competitive in costs with corn ethanol,” says Kergy CEO Mitch Mandich, who gave up several CEO opportunities at large public companies to run Kergy. The technology is exciting enough that Arie Geertsema – director of the University of Kentucky’s Center for Applied Energy Research and formerly managing director of the corporate R&D Division of Sasol, the most experienced gasification com­pany in the world – was excited enough by the tech­nology to give up his position and join Kergy.

    Mandich and his team are right to be enthusiastic. Ethanol – and soon cellulosic ethanol and its successors – offers not only a cleaner, cheaper alternative to gasoline but one that’s made in America. The environment can no longer sustain fossil-fuel emissions, and the US economy and foreign policy would be far better off without our dependence on foreign oil.

    We don’t need far-off technologies like hydrogen fuel cells to achieve a future that is more environmentally and economically secure. And we don’t have to pay more for cleaner transportation energy. We have the fuel in ethanol, and we have the technology to produce it, the distribution systems to move it, the pumps to dispense it, and the cars to run on it – all in place and ready to go today. The doorway to a future with fewer economic and environmental risks is before us. All we need do is step through it.

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    Think Equity / The green revolution Tue, 12 Sep 2006 04:42:04 +0000 In this video from Think Equity’s annual growth conference, Vinod Khosla discusses alternative sources of energy, such as making ethanol a viable substitute for much of the petroleum now used to fuel cars.



    Vinod Khosla on clean energy alternatives

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    Biofuels: Think outside the barrel Sun, 02 Jul 2006 05:00:08 +0000 In this deck, get Vinod Khosla’s take on the future of biofuels. 

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    A model for implementing the “bicycle commute economy” Sun, 02 Apr 2006 07:01:02 +0000

    The economic development of India’s 600 million strong rural population presents formidable challenges and also great opportunities. A model called RISC – Rural Infrastructural & Services Commons – is presented that has the potential for achieving the multi-faceted goals of sustainable economic development through more efficient utilization of available resources by focusing them into a minimum viable economic size. Five thousand such rural centers, built around existing infrastructure like railway stations, “haats” (informal weekly markets currently in operation in rural India), or Tier III/IV towns could place most of the rural population within a bicycle commute of ACCESS to many modern resources (like power, communications and education). The model calls for concentrating existing and ongoing investments into critical mass population chunks rather than spreading them out into individual villages in uneconomic sizes and at exorbitant cost. Then it allows the “invisible hand” of markets, not planned activities or industries, to drive growth, and direct resource usage on an economic basis…

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    The microcredit summit campaign as a social movement Wed, 15 Mar 2006 04:45:59 +0000